A warm welcome to today's earnings call of MBB SE, following the publication of the company's half year figures for 2023. The CEO, Dr. Constantin Mang, will speak in a moment. We're looking forward to the presentation. With this, I hand over to Dr. Constantin Mang.
Thank you. Good afternoon from Berlin. My name is Constantin Mang, I'm CEO of MBB, and I'm looking forward to presenting our first half year results to you today. Let's start with a very quick recap on what makes MBB special. MBB offers long-term succession solutions to sustainable Mittelstand companies, and the way we do this is pretty unique, because, first of all, we are a family business, and that means that we share the same DNA with the businesses that we want to acquire. Secondly, we are fans of the capital markets. That's why we are here today, and that's why three of our subsidiaries are also stock listed. Thirdly, we have a long-term focus. When we buy a new company, we don't have the intention to sell it, but we want to develop it and grow it for the long term. Fourth, we are sustainable.
Not because we are hippies, but we believe that there are lots of interesting opportunities in the transition towards a more sustainable economy. Before we dive deeper into each of our subsidiary, I'd like to present you my three favorite growth figures from the first half of 2023. This time, we are looking at the order intake of Friedrich Vorwerk, that grew by 26% to EUR 318 million. That's a new record for the company, and despite all the doubts, I think this proves that the market position of Friedrich Vorwerk is actually stronger than ever. The second figure I want to show you here is the 29% revenue growth of Aumann. That is as well, a record for the company, and it again shows that Aumann's position in the market for e-mobility is strong and growing.
The third figure I want to present to you is the revenue growth of Delignit. Delignit is definitely the growth champion in the MBB group at the moment. Their revenues grew by 50% in the first half year to EUR 48 million. Now, let's take a look at the stories behind these figures, let's start with Friedrich Vorwerk. As mentioned, the record order intake, that record order intake also led to a record order backlog of EUR 467 million. That's driven by the energy transition in the end, and one particular driver here, the large power lines, the par-- large electricity projects that are needed to bring sustainable energy, especially wind energy, from the north of Germany to the south.
This order backlog does not include the large power line A-Nord, which Vorwerk expects to be awarded to in the coming weeks, and the volume of A-Nord is expected to exceed EUR 1.1 billion, of which Vorwerk will probably get something around 40%. The profitability of Friedrich Vorwerk has been temporarily impacted, and that's due to the pressures on both the material and personal costs on the one hand, and on the other hand, on the margins in large LNG projects that the company is actually doing at the moment. We've been talking about the LNG project in Wilhelmshaven last time, which led to a softer profitability at the end of last year, and also at the beginning of this year.
In the last weeks, it turned out that also the 2nd large LNG project in Germany, the one in Brunsbüttel, is a little bit under time pressure. Both these LNG projects have been planned and need to be executed under enormous time pressure, and therefore, this impacts also the margins of Friedrich Vorwerk at the moment. The good news is that both projects should be completed by the end of the year, and then the focus of the company can really turn to the electricity project, which we believe are much more comfortable in terms of timing, but also margins.
When we look at the revenue figures, we saw that Friedrich Vorwerk grew by 16% to EUR 166 million in the first half of 2023, and it had an EBITDA margin of 8%, which is below what we had originally expected for the reasons that I just mentioned. Let's turn to DTS here on the right side. You know that DTS is an IT security specialist and the revenues of DTS in the first half of 2023 were slightly lower than in the previous year. That has also to do with the high benchmark that the previous year, and especially the first half of the previous year, was extraordinarily strong.
Nevertheless, the company has seen much higher order momentum in the last week, so we expect the coming month to be stronger, and therefore DTS also returning on its growth path. The good news is that the EBITDA margin of the company has been very stable and comfortable at a margin of 50%, and I think that shows that the company is really able to earn good money, even though we saw this softer start into the year. We see a lot of market traction for new software products and security services that DTS introduced this year to the market.
We therefore believe that, starting next year, when these products will have a stronger impact on the P&L of DTS, we will see a quite a positive development here of both revenues and also margins of the company. Let's turn to Aumann. I mentioned at the beginning on the first page, the strong order intake of Aumann, and that also led to a very strong order backlog. In fact, for the first time in the company's history, we talk about an order backlog that succeeds the EUR 300 million benchmark, and that is quite an achievement for the company, and I think proof of the demand for Aumann's technologies that are needed to automate the production of components for electric cars, such as batteries and electric motors.
We also saw that the EBITDA margin improved by 3.2 percentage points in the first half year, and that basically underlines the steady increase in profitability that we expect for Aumann to continue going forward. Right now, we are at 7% EBITDA margin, but we don't think that that's the end of the story. In fact, the growth momentum of the company is pretty strong, and we believe that there's also some room for further margin improvements. The excellent market position of the company is actually paired with also a high net cash position and a 57% equity ratio, and that allows both for the organic growth that we are seeing at the moment, with 29% growth rate in the first half year, but also potentially for M&A opportunities.
We do see quite a few potential add-on acquisitions for Aumann at the moment, and this might definitely be one way to strengthen the market position of Aumann further. Turning on the right side to Delignit. We saw Delignit really at its best in the first half of 2023, and the strong revenue growth of 50% was driven by the quite resilient light commercial vehicle, but also caravan markets. Despite the challenging automotive environment, these two submarkets have proven to be strong and resilient, and Delignit, being an important supplier to the submarket, benefited from that as well. We also see the effect on profitability. Basically, Delignit was able to more than double its EBITDA, and that is due to the higher utilization.
However, the high utilization also means that Delignit needs to think ahead how to continue its growth story, and for that, we are very happy that Delignit was able to successfully complete a capital increase a few weeks ago, with gross proceeds of EUR 8 million and we think that this is a very strong basis to complete the next growth steps that will allow Delignit to continue on its growth path. Finally, let's look at, let's take a look at our Consumer Goods segment with Hanke Tissue and CT Formpolster, mattress producer in our group. Both companies were able to grow in the first half, but a lot of this growth is also driven by inflation. Demand is not particularly strong, neither for tissue products nor for mattresses at the moment.
For the mattress industry in particular, we are expecting a softer summer month, because at the moment, consumers don't seem to buy a lot of new mattresses. They seem to focus more on other types of consumer spending, such as travel, for example, home improvement. New furniture, new mattresses is not so much in the focus right now. So we expect demand to be lower in the coming weeks. Also profitability of both companies, I must say, has been not at the level that we would have liked to see it, and that's mainly due to the high volatility of the energy and the material prices.
We think that especially Hanke Tissue will recover in, in the second half, but the material price and energy price situation make it quite challenging for these companies to generate the profits that they have generated in the past. Let's take a look on how the segments developed in aggregate. We have the Service & Infrastructure segment, which consists of Vorwerk and DTS. We have the, the Technological Applications segment, which consists of Aumann and Delignit, and we have the Consumer Coods segment, which consists of Hanke Tissue and CT Formpolster. What you see on this page is that basically all the three segments accrue in the, in the first half, and that's very good news.
What you also see is that the EBITDA of the Service & Infrastructure segment is much lower this year compared to last year. On the other hand, you see the strong improvement in, in the EBITDA in the Technological Applications segment, and these two effects basically almost balance each other out. We have the Consumer Goods segment, which is also weaker in terms of profitability this year, and, and this in aggregate, leads to a slight decline in the EBITDA. If we look at how the margins developed from the first quarter to the second quarter, we see that both the Service & Infrastructure segment and also the Technological Applications segment, were improving its margin from the first to the second quarter.
However, this improvement hasn't been as strong as what we had expected, especially in the Service & Infrastructure segment. We thought this improvement could be even stronger. Then we have the Consumer Goods segment, which is basically also not improving in the way we would have liked it to see. Nevertheless, for the Consumer Goods segment, we really think that in, in the second half, we do see a recovery here. When we take all of these numbers together, we end up with our group figures. Overall, the MBB group grew by 13% in the first half of 2023.
We have an EBITDA that is lower by 16% and reached EUR 32 million in the first year of 2023, compared to EUR 38 million in the year previously, which means that the EBITDA margin of the group basically declined from 10%- 7.5%. If we look further and at what that means for the complete year, our revenue forecast of EUR 850 million- EUR 900 million seems very well reachable. We are almost at the half of the lower bound already and expecting a stronger second half of the year. There we think that we are quite comfortable.
On the EBITDA margin side, we had a previous forecast of 9%-11%, which we slightly lowered now to 8%-10% in order to reflect the softer profitability in the Service & Infrastructure segment mainly, and we believe that this forecast can very well be reached, but it is a bit less than what we expected at the beginning of the year. Taking a look at our balance sheet, you see that MBB still has a lot of cash. We have EUR 446 million of cash in the MBB Group, out of which EUR 373 million is net cash, and out of that, around EUR 332 million are attributable to the holding MBB SE.
This is basically funds that we want to invest into new businesses in the long term. Of course, we also want to let our shareholders participate from it, and that's why we paid a dividend of EUR 1 per share this year, which amounts to EUR 5.7 million in total. Due to what we believe is a very attractive valuation of MBB at the moment, we also decided to do a share buyback. In the first half of 2023, we bought back shares for an aggregate amount of EUR 7 million. Of course, the goal is to also buy new companies and find new members for the MBB group, and we think that the conditions for that are actually improving.
On the left-hand side on this page, you basically see how the EBITDA multiples developed on, on the stock market for German small caps, and you see that the valuations have come down. Typically, there's a time lag between the public and the private markets, and that's exactly what we've been seeing. We haven't seen the reduction in multiples last year, but it is now coming through step by step, and we believe that as MBB, we are ideally positioned to benefit from this more interesting valuation environment that we are in right now. Due to the rising interest rates, the borrowing costs are also increasing, and that creates challenges for private equity firms and other companies that use a lot of leverage to buy new companies.
MBB, on the other hand, is buying new companies mostly with equity-based financing, which means we are not as much affected. In fact, it creates a more level playing field now for MBB and investors that use LBO structures. Overall, we think that our competitive positioning is becoming stronger and the opportunities are becoming more interesting. We believe the, the time for new acquisitions is becoming more and more interesting with every interest rate step that the central banks basically take in, in, in the direction they- they've been heading now for quite a while. To conclude this presentation, I'd like to show you what the, the valuation of MBB can be basically benchmarked with at the moment.
You see that our shares in the publicly traded companies, Vorwerk, Aumann, and Delignit, is currently worth EUR 205 million, round about EUR 205 million. On top of that, you can take the cash in the holding MBB SE, then you are already beyond our current market capitalization, without taking into account the private companies like DTS, that definitely also have a substantial value. We believe that the current valuation of MBB is quite attractive. As I said before, that's why we also purchased quite some of our own stock in the first half year. Now I'm looking forward to your questions, and I thank you for your attention until now.
Thank you very much for your presentation. We will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask your questions in person via our audio line. To do so, click on the Raise Your Hand button. If you have dialed in by phone, please use the key combination star 9 followed by star 6. If you do not have the opportunity to speak freely, you can also place your questions in our chat box. We received 1 question from Christian Ratajczak. "The total shareholder return is very poor. Purchases are not taking place. Why is there, for example, no special dividend of EUR 10 per share? Shareholders should be rewarded for waiting. Share buybacks don't help either, as the free float decreases.
I would actually disagree that share buybacks don't help. We believe that at the current valuation levels of the MBB stock, share buybacks are actually the smarter way to return capital to our shareholders. Nevertheless, I mentioned that we, we, we paid out a dividend, and that's something we have been doing since our IPO, and it's something that we want to continue doing. We believe that at the current stock price levels, buybacks are the, the more interesting tool, basically, to, to return. By the way, by, by the way, there's also an increasing, let's say,
Return for waiting until we acquire the next company, because the interest rate on the capital, of course, that we have on our balance sheet is also rising, and therefore it becomes, in my opinion, a bit less painful at the moment, if you want to wait until we make the next big acquisition.
Thank you very much. I received 3 questions from Robert Röttgen . "How is the stance of the company against a large buyback of shares of MBB, as the valuation seems to be depressed?
sorry, could you, could you repeat? I have to,
How is the stance of the company against a large buyback of shares of MBB, as the valuation seems to be depressed?
We don't have a stance against buybacks. It's, it's kind of. It seems to be the opposite question of the previous question. We don't have a stance against buybacks, but the opposite. We think that at the current valuations, and Rob calls it depressed, I don't like to be depressed, so I call it attractive. Basically, I think at these valuations it makes a lot of sense to do buybacks. That's why we are doing them, and that's why we want to continue doing them.
Okay, thank you. The second question, secondly, the M&A activity of MBB has been low the last years, for good reasons, as you explained. Is this picking up, and does MBB have some targets regarding M&A for this year and upcoming years?
Yes, of course. I mean, I think you have to distinguish between M&A activity and basically having targets that we conduct due diligence on, and making an acquisition. Our M&A activity has actually not been that low by the measures that I look at. We are seeing interesting companies, and I think we are seeing more interesting companies this year than we saw last year, for example. The activity is actually pretty good. At the same time, we haven't made an acquisition.
To be honest, I don't measure the success of our M&A activity only by making acquisitions, because making a bad acquisition can be much worse than having a little bit of patience and waiting for the, the, the, the, the fat pitch, you know? The good acquisition that creates extraordinary shareholder returns. I don't think we have a bad M&A track record, and not a bad M&A activity, and I'm actually quite content that we didn't make any mistakes so far. In terms of momentum, I think the momentum in the M&A pipeline is pretty strong at the moment and stronger than it has been last year. Especially because prices are simply more interesting than what they've been before.
Okay, and regarding M&A, strategy, we received a follow-up question from Mr. Böhringer: "In which segment do you intend to buy a new M&A? Do you have concrete projects?
Yes, we do have concrete projects, so we are looking at lots of leads. It's not that we are not buying because we are sitting on our hands. We are looking at lots of companies in different sectors. I mentioned on our intro slide that we like sustainable companies because we think they have an underlying growth trend, which will last not only for a few years, but for a long time. Our transition towards more sustainable economy might be actually one of the largest transitions that we have seen, at least in Germany. You can think of it politically what you want. It definitely creates a lot of economic opportunity, so that's something that we like.
We are also looking at a wide range of industries. It is important for us that we see some underlying growth trend. We are not looking at companies that don't have any, any hope to double in the next few years, basically, you know? We, we are looking at companies that benefit from a growth trend simply because then it's easier to increase the value of the, the, the company. These can be found in different industries, and that's why we also not limit ourselves to a small set of industries.
Thank you very much. Received in the meantime a question via audio. Please go ahead, Bernard Friedman. You can unmute yourself now.
Hello, Dr. Mang. I have, I have a question on Delignit, and the question is why, why, why... I'm still puzzled why you did not take part in the capital increase of Delignit that happened to a share price that had a huge discount to the share prices prevailing ahead of the capital increase. Did you sell your rights or did you just not use them?
No, we didn't sell any rights. To be honest, we had, I'm not sure how well that works in English, but two hearts in our chest, right? On the one hand, the valuation of Delignit is also very attractive, as you mentioned, and the valuation that we conducted, that capital increase, was definitely a valuation where we would have been interested in buying Delignit stock. On the other hand, we really didn't want to limit the free float of Delignit any further. On the contrary, I think that the Delignit stock, in the last year, has suffered a little bit by having such a low free float market cap.
In order to give the company a chance of having a proper capital market presence, we believe that it is important to get a substantial free float and to choose also investors that are committed to the company for the long term. That's why we also created this, let's say, interesting price point here to attract new investors, to increase the market presence, to increase the free-flow market cap of Delignit.
Mm. If, if I may comment on that, maybe it was misunderstood by some market participants in MBB not having trust in Delignit at such a low price.
To be honest, I didn't see that in the interest for the capital increase. Actually, the demand was pretty high, and we had very interesting new investors that now also became investors of Delignit. I, I don't think that we basically created any damage here. Quite the opposite. I think our goal to increase the shareholder shareholders in Delignit with really interesting new, new participants was achieved.
Yeah. Okay, thanks a lot.
Thank you very much for your question, Mr. Friedman. We received your question regarding Vorwerk. You have increased your position in Vorwerk. Is this something you will continue to do on these levels? What measures do you intend concretely to improve the results of Vorwerk?
Yes, we have increased the shareholder, shareholding a little bit, and, you know, the valuations of Vorwerk were just so attractive that we couldn't not do it. The question whether we're gonna continue that also depends, of course, a little bit on the stock price. If it continues to be as attractive as it is today, I think the chances are not too bad that we might increase a little bit our shareholding further. Of course, we are supporting the management of Vorwerk in several ways to improve the results again. The main problem here is really resolving the capacity bottlenecks.
Yeah, so we had the capacity bottlenecks, which need to be resolved in order to grow the company further in a more sustainable and profitable way. On the other hand, we have these material and personal cost issues, and also the impact from the LNG projects that I mentioned before. These are things that we can also support the management in, but I think the management has a lot of attention on these issues right now, and these are also things that will grow out of the P&L over the next months. I think the remaining key issue here, where we might be able to help a little bit, is resolving the capacity bottlenecks.
Okay, thank you very much. We got another question from Mr. Böhringer: "What do you intend to make the sector Consumer Goods profitable?
Yeah, that's a very good question. I, I, I think a lot of what we've been seeing in the Consumer Goods segment over the last month was basically exogenous. The price shocks in the energy markets, also in the raw material markets, these are things that were exogenous to these companies, they are very difficult to anticipate. To be honest, also, we as MBB have only limited power to mitigate these effects. That, that's really sort of the main reason for the lower profitability. Again, to a large extent, we believe that we will automatically grow out of these. Now that we have a little bit of a more stable energy price situation, this will become easier to manage.
Of course, we do our best to also support the companies here, in order to improve profitability. Both companies have programs running, that aim at cost reductions, as well as managing these volatile prices, and we are there to help them. Some of these exogenous shocks cannot completely be absorbed by better management.
Okay, thank you very much. I received a question from Lukas Spang. Please go ahead. You can unmute yourself now, Mr. Schwang.
Yes. Hi, good afternoon, Dr. Mang. Just one question concerning the M&A pipe. You have now already mentioned that multiples are slowly coming down, and that your focus is mainly on sustainable companies, but what is about the pipeline in general? Are there any changes, so maybe in terms of that, the size of the companies has changed, that you are looking on, or concerning the industries, you're looking on, or in terms of profitability, or... Any deeper insight from this perspective would be helpful.
Yeah. We see an increase in the M&A opportunities, we saw that already, I would say starting in February or so this year. This is also something that not only we perceive, I think it's also a bit of a general industry trend. In terms of quantity, I would say the number of opportunities rises. In terms of quality, what we are seeing now in the last few months, more than in the previous year, for example, are really companies that are struggling with their balance sheet, that are struggling now with higher interest rates to refinance themselves. Companies that had these kind of subsidized debt during COVID and now need to start repaying it. If you want, balance sheet restructuring cases.
Even though we are not not interested in companies that need restructuring in a business sense, these balance sheet restructuring cases can be quite interesting, because sometimes there are companies that are relatively healthy, but are simply have too much leverage that now becomes more and more expensive and more difficult to refinance. That's something if I want to point at one qualitative trend in our M&A pipeline, that's something we increasingly see. Despite that, I don't think there's a strong trend towards certain industries. It is in the end, always a pretty colorful mix of companies that we are looking at.
We have also not changed our, let's say, target sizes and sweet spots over the last two years. That has not really changed a lot.
Okay. On the seller side, do you see some more pressure that the sellers are more, let's call it, forced to bring a deal over the line?
Yeah
... see, still, still some, some hesitation?
No, exactly. I mean, that's what I was trying to imply, that we see quite a few companies that are now forced to sell for different reasons. Sometimes it is also kind of carve-out situations, where a business needs to sell one part of its business to refinance the other ones. That's something that we increasingly see, and it can be interesting. It, we, we need to take a close look at these cases because, as I said, we, we don't mind balance sheet restructuring, not at all, but we don't want to really go into business restructuring. A company that has a problem with its products, its markets, and so on, I think for these kind of cases, we are not the best investor, to be honest.
Balance sheet restructuring can be interesting for us.
Yep. Okay. Thank you.
Thank you very much, Mr. Spang. In the meantime, we've received no further questions. We therefore come to an end of today's earnings call. A big thank you also to Mr. Mang, for your presentation and the time you took to answer the questions. Should further question arise at a later time, please feel free to contact Dr. Mang or us. Thanks for listening, and I wish you all a lovely week. Goodbye.
Thank you very much. Bye.