• Revenue: EUR624 million, organic growth of 4.9%.
• EBITDA Margin: 16.9%.
• Operating Cash Flow: Increased by 39%.
• CapEx: EUR83 million by end of June.
• Net Income: EUR41.3 million.
• Operating Margin: 11.2%.
• ROCE: 13% for the full year 2023, expected lower in H1 2024.
• Debt: EUR259 million at the end of June.
• Leverage Ratio: 1.33x.
• Liquidity: Nearly EUR320 million of undrawn confirmed lines.
• 2027 Sales Target: EUR1.7 billion.
• 2027 EBITDA Margin Target: Between 18.5% and 19.5%.

• Warning! GuruFocus has detected 4 Warning Sign with FRA:CBE.

Release Date: July 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mersen SA (FRA:CBE) achieved record half-year sales of EUR624 million with an organic growth of 4.9%.
• The company reported a significant increase in operating cash flow, up by 39%.
• EBITDA margin improved to 16.9%, reflecting strong operational performance.
• The acquisition of GMI was completed, adding EUR40 million in sales and enhancing Mersen's industrial structure.
• Mersen's strategic focus on silicon carbide (SiC) and electric vehicles is expected to drive growth from 2025 onwards.

Negative Points

• The semiconductor market is experiencing a decline, impacting Mersen's electronics segment.
• There is a noted slowdown in organic growth compared to Q1, with June deliveries being particularly weak.
• The solar energy market is in decline, mainly due to overstocking issues in China.
• The company's ROCE is expected to be lower for the full year due to higher investments and CapEx.
• Mersen faces challenges in the electric vehicle market, with some projects being postponed and market expectations not being met.

Q & A Highlights

Q: Could you tell us about the EV and EV semiconductor market trends and the potential impact on Mersen? A: The EV market is currently below expectations across all countries, including Germany. Mersen is focusing on its platform with ACC, which could become unique. The company remains vigilant and in regular contact with customers. The CapEx for ACC remains stable, and Mersen is prepared to meet their needs, with flexibility to adjust if necessary. (Luc Themelin, CEO)

Q: There was a slowdown in organic growth from Q1 to Q2. What does this suggest for the rest of the year? A: June was weak due to delivery issues and a slightly lower order book. However, the company expects H2 to be better, particularly in the solar and silicon carbide markets. The annual guidance of 5% organic growth is maintained. (Thomas Baumgartner, CFO)

Q: Can you discuss the expected synergies from the recent US acquisition of GMI? A: Mersen expects significant industrial and commercial synergies with GMI, enhancing its ability to address the US market. The acquisition strengthens Mersen's local footprint and control over the graphite channel, which will help boost sales. (Luc Themelin, CEO)

Q: What are your expectations for the chemical market and other segments in H2? A: The chemical industry remains strong with a good backlog. The company expects continued growth in this segment. For the process industry and US fuse distribution, Mersen anticipates a rebound in organic growth in H2. (Unidentified Company Representative)

Q: How is the integration of GMI progressing, and what are the objectives? A: The integration of GMI is underway, with a focus on industrial and commercial synergies. Mersen aims to enhance its US footprint and leverage GMI's strengths in specific applications and markets. The integration will also lead to increased sourcing from Mersen. (Thomas Baumgartner, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.