To kick off the autumn, Börse Express invited Semperit to a talk at the Vienna Stock Exchange. Our CFO Helmut Sorger spoke with Börse Express editor-in-chief Robert Gillinger in front of around 60 guests. We have summarized some of the points of the conversation below.
Semperit's risk profile following the sale of the medical business:
Semperit’s risk profile has improved significantly. Before the sale, there were two sectors, industrial business and medical gloves, between which there were no synergies apart from joint administration and accounting.
With examination gloves, the company was active in the mass market, i.e. the commodity sector - with strong competition from Asia. "If you don't have the capacity for cost leadership and a leading market position in the commodity sector, the decision to focus on the core business is the right one," says Sorger, explaining the rationale for the sale.
The two divisions Semperit Industrial Applications (SIA) and Semperit Engineered Applications (SEA):
With highly efficient production and cost leadership, the SIA division focuses on industrial applications in connection with large volumes. These include hydraulic and industrial hoses as well as profiles. Success factors here are cost leadership, volume, standardization, low complexity and simplification.
SEA, on the other hand, focuses on customized technical solutions and includes the production of escalator handrails, conveyor belts, cable car rings and other technical elastomer products as well as the Rico Group (liquid silicone and toolmaking). SEA therefore stands for customer-specific products, specialization and therefore more niche markets and is more strongly driven by engineering.
What makes Semperit "magnificent"?
"These are our 4.200 colleagues - the experience and knowledge of our team. Semperit is a traditional company with 200 years of experience and innovative strength," says the CFO.
"We have 200 years of recipes for rubber compounds in our books. We benefit immensely from this, as these compounds play a key role in determining the performance and quality of the products."
In hose production, the aim of the compounds is to maximize production speed without the rubber starting to vulcanize. The right compound guarantees important product characteristics such as abrasion resistance, flexibility, hardness, temperature resistance and durability in the SEA division's often customized solutions. And what Semperit's expertise is in rubber compounds, Rico's expertise is in toolmaking, adds Sorger.
Why the addition of liquid silicone?
"Our mission is to be a leading supplier of elastomer products and applications for industrial customers. This means that we do not limit ourselves to rubber. Liquid silicone is an elastomer and a natural complementary product to rubber and is superior to rubber in a number of applications. Silicone is resistant to low and high temperatures, UV-resistant and chemically inert and therefore does not react with acids, bases or body fluids. This is why it is often used in medical technology."
Sorger refers here, among other things, to sleeves manufactured by Rico, which are used in cataract surgery and are crucial for successful surgery and improved surgical results. Overall, the market for liquid silicone has been growings trongly for years at around 10% per year.
On the EBITDA guidance for 2024 and whether it is "not ambitious enough":
"Our guidance is quite ambitious. We must not forget that Semperit still had a tailwind from high prices and order backlogs in 2023 - especially in the first half of the year. These order backlogs were on our books and we did not let our customers cancel them. This tailwind is missing this year," explains Sorger.
"We communicated early on that 2024 would be a difficult year. But we also took precautions early on and launched a cost-saving program that has already cut costs by over EUR 14 million since initiation."
On the medium-term goals for 2026:
These forecast sales of over EUR 900 million and EBITDA of around EUR 120 million for 2026. "We are talking purely about organic growth. Based on EBITDA 2023, we see around EUR 18 million upside from the cyclicality of our business, including from the operating leverage in the hose segment and profiles. We want to generate EUR 14 million from structural growth, particularly at Rico, and new business areas. And EUR 10 million will come from cost measures, although we have also factored in some headwinds here - for example, additional costs due to new regulations, cyber security, etc."
With a view to new business areas and products with growth potential, Sorger gives the example of the so-called "tire tag". These are vulcanized chips that are attached to truck tires. This helps to track the product life cycle of the tire. "Semperit not only has expertise in rubber compounds, but also in combining rubber with other materials - in this case with a microchip," says Sorger.
Shareprice and feedback from investors:
The CFO would of course like to see the share price higher, but also points to the special dividend paid in the previous year. "We are hearing from our shareholders and analysts that our strategy - i.e. focusing on the core business with two extremely efficient divisions with a common solid foundation - has been understood. We must now deliver. We were on track with the half-year figures and we have confirmed the guidance. This must now continue."
You can read the Börse Express article in German here: https://mailchi.mp/boerse-express.com/be-talk-semperit
