TESB.BR - Tessenderlo Group

[giofranchi]

The interview that you posted is quite telling.

 

Yeah! If you can understand it…!! I had found that interview… but couldn’t understand a single sentence!! :(

 

Gio

 

[skanjete]

Please forgive me for asking a question while barely having looked at both companies in depth. But if you like the manager, why not invest in Picanol instead? You still have the Tessenderlo upside as well as the chance of buying the future Belgshire.

 

You're right.

Theoretically Picanol could even be better. I actually bought some at lower prices, because one at that moment was only paying for the Picanol business and got the Tessenderlo investment plus cash for free. So the downside at Picanol was minimal, with a nice potential.

 

But there were 2 things :

- the weaving machine business is poised to experience a cyclical dip over the next few years. Of course the company won't get into trouble this time and will remain steadily cash generative. So this was actually no problem, but the potential of Picanol over the next few year will have to come from their Tessenderlo investment, which has a value of about a third of the stock price I think.

- the main thing however was the very small free float and absolute power of Tack (90%). It's not only difficult to get shares in quantity, but when you have them, you're surrendered to the benevolence of Tack. They say they will remain listed. But apart of that commercial reason I mentioned, there is no reason whatsoever to remain listed. The attitude of the company is also more as from a private company and not like a public company. So although they say they'll remain listed and I tend to believe them, there's always a risk of a take-under by the controlling shareholder.

 

In view of the above concerns and my confidence in the Tessenderlo story, I opted for a somewhat higher risk in Tessenderlo and higher potential.

 

PS. I actually suggested to Haspeslagh if there was no possibility to merge the 2 companies. Picanol could f.e. take over Tessenderlo for cash or a share swap. I thought maybe they could use the tax loss carried forwards from Tessenderlo to offset some profits at Picanol. But they didn't seem to consider this possibility. The first priority is fixing Tessenderlo they said.

[giofranchi]

Ok, so now let me see… what I am looking for:

 

1) A manager young enough – TEZ.F: check!

 

2) A manager with a good and already long enough track record; I want to know what that manager has accomplished in the past, and for how long he has sustained good performance – TEZ.F: check! Though I must admit it is only on the basis of what skanjete told us… I wasn’t able to find practically anything else about Mr. Tack’s business accomplishments.

 

3) A manager with a lot of skin in the game – TEZ.F: check!

 

4) A manager who explains extensively and clearly enough how he/she is going to create value in the future – TEZ.F: unfortunately, it is very difficult to find Mr. Tack writing and reasoning about his businesses and strategies… In the last 24 hours I have found practically nothing… Also the Picanol Letters to the Shareholders read like an account of what has happened… but the why and the how are almost never touched!

 

5) I should understand easily enough what the manager has explained, and agree with his/her views about the business – TEZ.F: without 4) requisite 5) of course cannot be fulfilled.

 

6) A business that is predictable enough – TEZ.F: check! Though clearly not high margins, chemical products will be needed for the foreseeable future.

 

So, where does all this leave me? Points 4) and 5) are clearly a problem for me, in part also point 2)… Is it too much to ask of Mr. Tack that he explains what he is about to do, and how he intends to achieve his business goals? skanjete, do you understand if I say I trust you and thank you very much for the work you have shared with us, but that I also need Mr. Tack himself to confirm what you have said?

…But I guess this is exactly why in general I find it so much difficult to invest in public companies outside North America: because elsewhere I find so little information and transparency!

 

I don’t know… I admit I am torn: on one hand I like very much what’s going on here, on the other hand my investment process isn’t complete…

 

Gio

 

[skanjete]

 

4) A manager who explains extensively and clearly enough how he/she is going to create value in the future – TEZ.F: unfortunately, it is very difficult to find Mr. Tack writing and reasoning about his businesses and strategies… In the last 24 hours I have found practically nothing… Also the Picanol Letters to the Shareholders read like an account of what has happened… but the why and the how are almost never touched!

 

5) I should understand easily enough what the manager has explained, and agree with his/her views about the business – TEZ.F: without 4) requisite 5) of course cannot be fulfilled.

 

So, where does all this leave me? Points 4) and 5) are clearly a problem for me, in part also point 2)… Is it too much to ask of Mr. Tack that he explains what he is about to do, and how he intends to achieve his business goals? skanjete, do you understand if I say I trust you and thank you very much for the work you have shared with us, but that I also need Mr. Tack himself to confirm what you have said?

…But I guess this is exactly why in general I find so much difficult to invest in public companies outside North America: because elsewhere I find so little information and transparency!

 

I don’t know… I admit I am torn: on one hand I like very much what’s going on here, on the other hand my investment process isn’t complete…

 

Gio

 

Gio,

 

I admire your consistency and your investment process.

 

You're right. Tack won't tell it himself. He likes too much his low profile. It's also part of the culture of course. In the US, a succesfull businessman is considered an example, a star, so he has an incentive to come out with his accomplishments. In socialist countries, a succesfull businessman is considered a shady figure by many people/politicians. So in this case it makes perfect sense to keep a low profile.

 

It's true we have no idea of the strategy of Tack and he doesn't explain his views on how to create a platform for future value creation. But I let the trail and figures he left in the past tell the story.

Based on what he has done in the past, one can figure out what kind of businessman he is, and what he will do in the future, given a certain set of circumstances.

 

It's like evaluating an investor. Sometimes his words or even his investment record doesn't tell the story because stellar results can be the consequence of favorable circumstances or simple luck. To evaluate an investment manager, I consider his thought process. If that process goes along the lines of value investing, it tells a lot more of future results than his track record.

 

I think that I have an idea of the work and thought process of Tack and Haspeslagh, based on their comments and actions in the past and the subsequent events. For me that's enough. I can image that this is not evident for someone else. Of course, if one lacks the conviction, it's better not to invest, because the necessary staying power will lack if the investment hits a tough patch.

[skanjete]

I see that the subject title mentioned TEZ.F as ticker.

I changed it to TESB.BR because the main and most liquid market is in Brussels.

[giofranchi]

I think that I have an idea of the work and thought process of Tack and Haspeslagh, based on their comments and actions in the past and the subsequent events. For me that's enough. I can image that this is not evident for someone else. Of course, if one lacks the conviction, it's better not to invest, because the necessary staying power will lack if the investment hits a tough patch.

 

Thank you again, skanjete!

I guess the simple facts you speak Dutch and you were able to attend the Annual Meeting are big advantages you have over the rest of us…

I will go on following this thing with great interest, hoping to make up my mind sooner rather than later! :)

 

Cheers,

 

Gio

 

[WhoIsWarren]

skanjete,

 

Thank you so much for posting this idea.  I'll be doing more work on this one for sure.

 

The interview that you posted is quite telling.

 

Yeah! If you can understand it…!! I had found that interview… but couldn’t understand a single sentence!! :(

 

Gio

 

Gio, I know it's far from perfect, but you can use Google translate!!  Or, given your ambition to become a billionaire someday, wouldn't you consider spending a small amount of money on a translator?  Or hiring a consultant to look into Tack's past achievements / record and his business philosophy?  You know, it's not always going to be laid out on a plate.....and in this case it could be very much in our favour.

[giofranchi]

Gio, I know it's far from perfect, but you can use Google translate!!  Or, given your ambition to become a billionaire someday, wouldn't you consider spending a small amount of money on a translator?  Or hiring a consultant to look into Tack's past achievements / record and his business philosophy?  You know, it's not always going to be laid out on a plate.....and in this case it could be very much in our favour.

 

HIT & SUNK!!!  ;D ;D ;D

 

Gio

[WhoIsWarren]

 

HIT & SUNK!!!  ;D ;D ;D

 

Gio

 

Sorry gio, I wasn't trying to be a smarty pants......just suggesting that all is not lost here.  8)

 

Actually, you made an interesting observation about finding mainly North American ideas for your portfolio.  Well I would echo that a lot of the ideas I research are from N.A., probably more than I would wish.  And I think it's for two reasons.  One is what you've alluded to already: many N.A. companies have good communications with investors....IN ENGLISH.  And a second is that one source of my ideas is from places like this, where contributors are N.A.-centric, or by looking at the holdings of well-known value investors (which contributors here also do a lot -- a positive feedback loop!), most of whom are N.A.-based and have a N.A. outlook.

 

Of course, I'm generalising, but that's why it's great to hear off-the-radar ideas from skanjete.  I will also look up Goodwin.

[peter1234]

You know, it's not always going to be laid out on a plate.....

 

I think skanjete has been doing a great job!...

:)

[giofranchi]

 

HIT & SUNK!!!  ;D ;D ;D

 

Gio

 

Sorry gio, I wasn't trying to be a smarty pants......just suggesting that all is not lost here.  8)

 

No problem at all!! What you have said and suggested makes just perfect sense! ;)

 

Cheers,

 

Gio

 

[Haasje]

Because I just registered, am a little bored with balance sheets and Dutch is my 1st language, I ran the Trends article posted by Skanjete through Google Translate and than cleaned it up into a solid but non-professional translation. The author agreed to let me post it. Thanks to Bert Lauwers for the original article and responding so quickly. 

 

Luc Tack (CEO Picanol): "There are better managers here than I'

 

Bert Lauwers

 

Thursday, November 21, 2013 at 11u17

 

Friday, 26 July, Luc Tack got his second nomination in a row for Trends Manager of the Year. That day the CEO of Picanol announced that he had acquired over 25% of the shares in the chemical company Tessenderlo Group. Trends will announce the winner of the Manager of the Year award on Wednesday, January 8, 2014 for the 29th time. The most prestigious individual award for a manager in our country. Each week we introduce two nominees.The most prestigious individual award for a manager in our country. Each week we introduce two nominees.

 

Luc Tack (Picanol)

 

To say that Luc Tack welcomes us with enthusiasm, is a great overstatement. "I'd prefer not to have been nominated for Manager of the Year. I would much prefer to continue working in peace. Anyway, I’ll offer assistance where it is needed, "laughs Tack.

 

Yet, The 52-year-old from Deinze could have anticipated trouble when he, being Flemish, in a surprising move took over at Tessenderlo Group this summer. Almost in the same breath, he  plead a redesign of our social model. Tack is imbued with positivism about the future of our manufacturing industry. This put the media-shy entrepreneur straight in the spotlight and he was praised by business leaders as Luc Bertrand and Paul Buysse and top politicians like Johan Vande Lanotte.

 

Tack didn’t want any part of the praise: "I'm going to be honest: there are better managers than I am. As an entrepreneur, you are somewhat creative, but you need that creativity channeled through strong and disciplined managers. I merely nudge them. "

 

Financial and industrial investment

 

Four years ago Tack saved Picanol from ruin. In the midst of economic crisis, he dared to invest in the then ailing company. Tack bought the feuding family shareholders out and proceeded to turn the company around, in record time.

 

"This year we are having a very strong year again," Tack said. "We have great confidence in the future. We believe in global progress. Studies show that 500 million people evolve from poverty into the middle class. When that happens textile consumption increases enormously.

 

"Tack expects to experience temporary headwinds in 2014. "We know that we currently have a strong euro," said the CEO, which doesn’t seem to worry him much. "After all, we are in a cyclical business. The long-term trend is up, but the investment waves come and go.

 

Tack suprised the Brussels stock exchange by putting down 192 million Euro to acquire a package of 27,5% of Tessenderlo shares from the SNPE holding, which is controlled by the French Government. Tack, who also controls the yarn supplier Oostrotex and fabric producers Ter Molst and Symphony Mills, did his homework thoroughly. "It is a combination of a financial and an industrial investment. Tessenderlo is strong in Europe and America. Before that our revenues came primarily from the distant exports to emerging markets. So with this acquisition we increase stability in our group revenues. It also provides our group with additional know-how. "

 

That Tessenderlo is currently struggling and shares of the chemical group sharply decreased in value, doesn’t bother Tack: "We are long-term investors. Short-term Business results make no difference. "Asked about the recent strike at the Tessenderlo site in Ham Tack responds in general terms: "If you do not know the situation, you can’t pass judgement. Besides, I always believe that everyone has the best intentions. I’m assuming the best intentions. "

 

Own yard

 

It helps that Picanol isn’t gasping for air., Even after the purchase of the Tessenderlo interest. "We have no bank debt and are healthy. We always perform a stress test of our own company, we re-simulate the difficult period of 2008 and 2009 and see if we have enough financial reserves to cope. The crisis has taught us a lesson. "Whether this is a lesson for other companies? "We cook our own pot. My father said, "Everyone minds his own backyard”.

 

This year, Picanol is investing up to 17.5 million euro, into a new assembly and a new training center. Last summer the capacity of the foundry department Proferro has been significantly increased. Proferro manufactures components for companies like Atlas Copco and Caterpillar, but also for their own looms. "Foundry doesn’t sound very modern, but it is high-tech," stresses Tack. Picanol, which includes the electronics department PsiControl ("our little Siemens"), also continues to invest in automation of Proferro. "So we can offset wages, wich are a serious handicap for a manufacturing company in Belgium."

 

A job for everyone

 

Tack refuses to join the pessimism about labor costs in Belgium. "I am convinced that the labor problem will be solved. Ultimately, the government will make the right decisions. I can not imagine that everyone wants things to go to hell. Every policy maker wants to do good and enable progress? Okay, sometimes we get stuck but at some point the pressure is too great. And physics says that everything becomes fluid under high pressure (laughs). So that will get solved. "

 

“I don’t think for a second, we can’t get everyone a job. There are plenty of creative solutions. A new social model? We do not want to evolve into a society where we can not pay our schools or healthcare? I hope, after the elections, a lot of capable people emerge who will make strides forward. 

[Guest ajc]

Because I just registered, am a little bored with balance sheets and Dutch is my 1st language, I ran the Trends article posted by Skanjete through Google Translate and than cleaned it up into a solid but non-professional translation. The author agreed to let me post it. Thanks to Bert Lauwers for the original article and responding so quickly. 

 

Luc Tack (CEO Picanol): "There are better managers here than I'

 

Bert Lauwers

 

Thursday, November 21, 2013 at 11u17

 

Friday, 26 July, Luc Tack got his second nomination in a row for Trends Manager of the Year. That day the CEO of Picanol announced that he had acquired over 25% of the shares in the chemical company Tessenderlo Group. Trends will announce the winner of the Manager of the Year award on Wednesday, January 8, 2014 for the 29th time. The most prestigious individual award for a manager in our country. Each week we introduce two nominees.The most prestigious individual award for a manager in our country. Each week we introduce two nominees.

 

Luc Tack (Picanol)

 

To say that Luc Tack welcomes us with enthusiasm, is a great overstatement. "I'd prefer not to have been nominated for Manager of the Year. I would much prefer to continue working in peace. Anyway, I’ll offer assistance where it is needed, "laughs Tack.

 

Yet, The 52-year-old from Deinze could have anticipated trouble when he, being Flemish, in a surprising move took over at Tessenderlo Group this summer. Almost in the same breath, he  plead a redesign of our social model. Tack is imbued with positivism about the future of our manufacturing industry. This put the media-shy entrepreneur straight in the spotlight and he was praised by business leaders as Luc Bertrand and Paul Buysse and top politicians like Johan Vande Lanotte.

 

Tack didn’t want any part of the praise: "I'm going to be honest: there are better managers than I am. As an entrepreneur, you are somewhat creative, but you need that creativity channeled through strong and disciplined managers. I merely nudge them. "

 

Financial and industrial investment

 

Four years ago Tack saved Picanol from ruin. In the midst of economic crisis, he dared to invest in the then ailing company. Tack bought the feuding family shareholders out and proceeded to turn the company around, in record time.

 

"This year we are having a very strong year again," Tack said. "We have great confidence in the future. We believe in global progress. Studies show that 500 million people evolve from poverty into the middle class. When that happens textile consumption increases enormously.

 

"Tack expects to experience temporary headwinds in 2014. "We know that we currently have a strong euro," said the CEO, which doesn’t seem to worry him much. "After all, we are in a cyclical business. The long-term trend is up, but the investment waves come and go.

 

Tack suprised the Brussels stock exchange by putting down 192 million Euro to acquire a package of 27,5% of Tessenderlo shares from the SNPE holding, which is controlled by the French Government. Tack, who also controls the yarn supplier Oostrotex and fabric producers Ter Molst and Symphony Mills, did his homework thoroughly. "It is a combination of a financial and an industrial investment. Tessenderlo is strong in Europe and America. Before that our revenues came primarily from the distant exports to emerging markets. So with this acquisition we increase stability in our group revenues. It also provides our group with additional know-how. "

 

That Tessenderlo is currently struggling and shares of the chemical group sharply decreased in value, doesn’t bother Tack: "We are long-term investors. Short-term Business results make no difference. "Asked about the recent strike at the Tessenderlo site in Ham Tack responds in general terms: "If you do not know the situation, you can’t pass judgement. Besides, I always believe that everyone has the best intentions. I’m assuming the best intentions. "

 

Own yard

 

It helps that Picanol isn’t gasping for air., Even after the purchase of the Tessenderlo interest. "We have no bank debt and are healthy. We always perform a stress test of our own company, we re-simulate the difficult period of 2008 and 2009 and see if we have enough financial reserves to cope. The crisis has taught us a lesson. "Whether this is a lesson for other companies? "We cook our own pot. My father said, "Everyone minds his own backyard”.

 

This year, Picanol is investing up to 17.5 million euro, into a new assembly and a new training center. Last summer the capacity of the foundry department Proferro has been significantly increased. Proferro manufactures components for companies like Atlas Copco and Caterpillar, but also for their own looms. "Foundry doesn’t sound very modern, but it is high-tech," stresses Tack. Picanol, which includes the electronics department PsiControl ("our little Siemens"), also continues to invest in automation of Proferro. "So we can offset wages, wich are a serious handicap for a manufacturing company in Belgium."

 

A job for everyone

 

Tack refuses to join the pessimism about labor costs in Belgium. "I am convinced that the labor problem will be solved. Ultimately, the government will make the right decisions. I can not imagine that everyone wants things to go to hell. Every policy maker wants to do good and enable progress? Okay, sometimes we get stuck but at some point the pressure is too great. And physics says that everything becomes fluid under high pressure (laughs). So that will get solved. "

 

“I don’t think for a second, we can’t get everyone a job. There are plenty of creative solutions. A new social model? We do not want to evolve into a society where we can not pay our schools or healthcare? I hope, after the elections, a lot of capable people emerge who will make strides forward.

 

Thanks.

 

 

[giofranchi]

Thanks.

 

+1... I am a big fan of things laid out on a plate!! ;D ;D ;D

 

Gio

[ragu]

Because I just registered, am a little bored with balance sheets and Dutch is my 1st language, I ran the Trends article posted by Skanjete through Google Translate and than cleaned it up into a solid but non-professional translation.

 

Haasje,

 

This is very much appreciated.

 

Best,

Ragu

[WhoIsWarren]

Because I just registered, am a little bored with balance sheets and Dutch is my 1st language, I ran the Trends article posted by Skanjete through Google Translate and than cleaned it up into a solid but non-professional translation.

 

Thanks Haasje -- a great first post!  ;)

You may find yourself becoming the board's 'go to' person for Dutch translations  ;D

 

[Haasje]

:) Good to hear it was of some use. He comes across as a genuinely good guy. 

[Libs]

Skanjete:

 

Great thread, thanks.

 

Bells are ringing for me on this one.. The French angle ( it's like a jockey change from John Candy to Bill Shoemaker), the Dutch/Belgian angle ( an efficient, cheap , direct operator....I know the Dutch, I'm one of 'em).

 

He not only turned Picanol around, he did it fast. He had SG & A down to 2005 levels in one year (2010).

 

I'm ok with him not giving us the nuts and bolts of what he's going to do. It looks like basic blocking and tackling in terms of bringing expenses in line.  What details do I need?

 

It looks like he's good on the revenue side too. Picanol has done well with new products and acquisitions.

 

Do you have any concerns with this big step up? Tess is 2.5X larger in revenue than Picanol. He's biting off a lot more.

 

 

 

 

 

 

[Spekulatius]

This looks like an interesting turnaround play after the management change. I do think there is a risk that a secondary is needed to boost the depleted equity base. The annual report 2013, which already mentions the new management seems to point in this direction, as they clearly state the difficult conditions, as well as the need to continue the repositioning (I interpret this that they will exit some business and probably acquire others).

[peter1234]

This looks like an interesting turnaround play after the management change. I do think there is a risk that a secondary is needed to boost the depleted equity base. The annual report 2013, which already mentions the new management seems to point in this direction, as they clearly state the difficult conditions, as well as the need to continue the repositioning (I interpret this that thry will exit some business and probably acquire others).

 

Agreed, it has quite a bit of debt. And yes, Equity has come down from 900M in 2009 to 240M in 2014.

Apart from potentially raising equity, they will probably try to refinance and/or push out the debt maturities.

 

With the re-positioning going on, it is hard to tell how cyclical the business is.

[skanjete]

Skanjete:

 

Great thread, thanks.

 

Bells are ringing for me on this one.. The French angle ( it's like a jockey change from John Candy to Bill Shoemaker), the Dutch/Belgian angle ( an efficient, cheap , direct operator....I know the Dutch, I'm one of 'em).

 

He not only turned Picanol around, he did it fast. He had SG & A down to 2005 levels in one year (2010).

 

I'm ok with him not giving us the nuts and bolts of what he's going to do. It looks like basic blocking and tackling in terms of bringing expenses in line.  What details do I need?

 

It looks like he's good on the revenue side too. Picanol has done well with new products and acquisitions.

 

Do you have any concerns with this big step up? Tess is 2.5X larger in revenue than Picanol. He's biting off a lot more.

 

The step up is of course a challenge. Picanol is a group of about 1250 people with a family background. Tessenderlo is a group of 5000 people with an institutional background.

 

I do think it will be more difficult than it was at Picanol to turn around the company culture.

However, when I last talked to them, they seemed pleased with the progress so far and very confident of the ultimate result...

 

But of course the step up from his private companies to Picanol was an even greater step up. Remember, he bought 90% of Picanol for about 15m€ (which now has a value of about 450m€)

 

[skanjete]

This looks like an interesting turnaround play after the management change. I do think there is a risk that a secondary is needed to boost the depleted equity base. The annual report 2013, which already mentions the new management seems to point in this direction, as they clearly state the difficult conditions, as well as the need to continue the repositioning (I interpret this that thry will exit some business and probably acquire others).

 

I would be very surprised if they need a secondary. Debt has come down since beginning this year, and they expect EBITDA to be somewhat higher this year. And covenants are in no danger of breach.

 

Repositioning : Recently it was stated that a final sale (agreed under previous management) was concluded and that repositioning was done with. At the annual meeting they were formal : everything they have at the moment, will stay. Also, it's not the style of Haspeslagh and Tack to sell businesses and acquire others. They prefer to make things work and stash the cash.

 

[Libs]

http://hugin.info/133974/R/1851124/646524.pdf

 

Q2 is out.

 

Recurring EBITDA ( REBITDA) = 85MM for 1H

 

( so the co is selling for 4 X REBITDA)

 

Other stuff - all #'s for 1H 2014:

 

REBITDA %  = 11% vs 4% for 1H 2013

Gross profit % = 24% vs 21% for 1H 2013

SG & A slightly up from 1H 2013 at 17.1% vs 16.8%

 

I notice the AGRO business is 40% of sales but generating 62% of REBITDA.

 

Not bad, I still like it at .5 sales, 4X REBITDA and 12X Earnings (run rate). I would expect S G & A % to start coming down, no?

 

As a comparison, Tess has a 3.6% net margin vs. 16% at WLK and CRD.L.

The latter sell for 3 X sales and 17-20 X earnings.

 

Plenty of upside here in my opinion and not that much downside.

 

 

 

 

 

 

[Libs]

http://hugin.info/133974/R/1851124/646524.pdf

 

Q2 is out.

 

Recurring EBITDA ( REBITDA) = 85MM for 1H

 

( so the co is selling for 4 X REBITDA)

 

Other stuff - all #'s for 1H 2014:

 

REBITDA %  = 11% vs 4% for 1H 2013

Gross profit % = 24% vs 21% for 1H 2013

SG & A slightly up from 1H 2013 at 17.1% vs 16.8%

 

I notice the AGRO business is 40% of sales but generating 62% of REBITDA.

 

Not bad, I still like it at .5 sales, 4X REBITDA and 12X Earnings (run rate). I would expect S G & A % to start coming down, no?

 

As a comparison, Tess has a 3.6% net margin vs. 16% at WLK and CRD.L.

The latter sell for 3 X sales and 17-20 X earnings.

 

Plenty of upside here in my opinion and not that much downside.

 

REBITDA was 87MM, sorry.

[60North Investments]

http://hugin.info/133974/R/1851124/646524.pdf

 

Q2 is out.

 

Recurring EBITDA ( REBITDA) = 85MM for 1H

 

( so the co is selling for 4 X REBITDA)

 

Other stuff - all #'s for 1H 2014:

 

REBITDA %  = 11% vs 4% for 1H 2013

Gross profit % = 24% vs 21% for 1H 2013

SG & A slightly up from 1H 2013 at 17.1% vs 16.8%

 

I notice the AGRO business is 40% of sales but generating 62% of REBITDA.

 

Not bad, I still like it at .5 sales, 4X REBITDA and 12X Earnings (run rate). I would expect S G & A % to start coming down, no?

 

As a comparison, Tess has a 3.6% net margin vs. 16% at WLK and CRD.L.

The latter sell for 3 X sales and 17-20 X earnings.

 

Plenty of upside here in my opinion and not that much downside.

 

I'd also say that this was pretty well in-line with what I was hoping for. The expenses Libs refers as SG&A (distribution, sales & marketing, administrative and other expenses) were down 40m YoY, equal to -23.5%. Sure that's a higher percentage of sales than last year but I'd think that cutting costs is quite well underway. The only thing I'm wondering is what kind of growth can they get to? I'm 'hoping' to see revenues of 2b in the end of FY16-17, don't really know whether that's a reasonable expectation or not.