Wendel’s start of the year saw a welcome recovery in organic growth for the unlisted subsidiaries, particularly those most affected by the pandemic and lockdown restrictions in 2020, accompanied by improving multiples leading to the positive NAV progression. However, the most recent highlight though is the upcoming investment in Tarkett, kicking off the HoldCo’s new investment roadmap, even if it raises some questions given its cyclical exposure.
Companies: Wendel (MF:EPA)Wendel SE (MF:PAR)
Wendel closed the year on a brighter note as the operating performance and the valuation of the unlisted assets recovered from the H1 lows, narrowing the NAV decline to modestly below the 2019 levels. Most importantly though, after a mute 2020 in terms of investments, the company is back in acquisition-mode as per its 2021-24 strategic roadmap, boasting a €1.8bn-strong liquidity position to fund its investments in search of higher growth.
Following a challenging Q1 which saw Wendel’s NAV fall by a third. The valuation of the unlisted assets, which saw a major hit in the midst of the sanitary crisis, have now led the second quarter NAV bounce-back of +17.3%. Recovering valuation multiples and better than expected results on some of the portfolio companies support the positive NAV development and a stronger outlook for H2.
Companies: Wendel SE
The hit to the NAV was somewhat expected based on the statements given by Wendel during the publication of its annual results. Although consolidated sales saw a rather tame 2.9% contraction in Q1, the COVID-19 impact is set to be more severe in Q2. As the lock-down lingers on, it will continue to stifle customer demand for many of the group’s companies.
Wendel closed a positive 2019 in terms of NAV progression. Unfortunately, following the global turmoil induced by the COVID-19 outbreak, its NAV has taken a dive. While the 2019 results were driven by the excellent results at Bureau Veritas, the activities of BV and its other portfolio companies will be certainly affected in the short term due to the current crisis. Wendel’s recent efforts to improve its debt profile and strengthen its liquidity position came at the crucial time.
Wendel’s first-half of the year was marked by a rising NAV (+12.2% in H1 19), cast down by challenging market conditions for its industrial unlisted assets, leading to nearly-flat consolidated sales growth and a soft outlook for the remainder of the year. On the other hand, the solid performance from its largest asset, Bureau Veritas, as well as its equity-accounted assets made for a mixed H1 19 for the group.
Portfolio simplification continues through the sale of 9 million shares in Saint-Gobain and the partial divestment of Allied Universal. The discount to NAV stands at a high level (32%).
Lower than expected FY18 net income due to higher non-recurrent items. Portfolio simplification to continue into 2019 is good to have, focus on non-listed investments less so.
Over Q3, Wendel’s assets saw mixed trends, leading some of its companies to adjust their expectations for FY18; management reiterated its strategy to simplify its portfolio and to invest in new high quality assets.
Over Q3, Wendel’s assets saw mixed trends, leading some companies to adjust their expectations for FY18; management reiterated its strategy to simplify its portfolio and to invest in new high quality assets.
Wendel sold yet another chunk of its cash cow, Bureau Veritas. This is officially to fund significant new acquisitions. That Wendel taps its golden goose in the middle of a market correction to grow its asset base is disturbing. What is more, its dividend income is immediately eroded while it is not clear that new-ish investments will generate dividends anytime soon.
Wendel’s new management lightens up on the previous management’s acquisitions and focuses on Europe. Wendel’s fortune remains very much a Bureau Veritas one.
A new Chairman and the appointment of a new CEO led to a change of era for Wendel, illustrated by the definition of a new strategic line. The family shareholders have reasserted their hands on Wendel’s strategy, leading to a closer relationship with the management, a more cautious development and the guarantee to receive an increasing dividend year after year. Wendel’s portfolio is being refocused, waiting for some new acquisitions, partly listed and located in Europe, the US or Africa.
Several important transactions have and are taking place over the year and, as we have already written (see our Latest dated 29/07/2015), Wendel’s consolidated accounts will be impacted in 2015 and over the next year by the changes in the scope of consolidation. The three major transactions are the sale of 10.9% of Bureau Veritas’s share capital and the acquisition of Constantia Flexibles both in March 2015, followed by the expected acquisition of the US group AlliedBarton by the end of this yea
Having divested a number of assets for several years, first to contribute to its financial deleveraging and secondly to reimburse the debt related to the investment in Saint-Gobain, Wendel has entered into a new investment cycle. A four-year strategic programme of development was announced in 2013, with the objective to invest €2bn over 2013-17.
2013 and 2014 went down as years of portfolio changes and, at the same time, as the start and implementation of the investment strategy. Wendel’s self-
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