One of a handful of companies offering a full range of battery electric underground mining machinery, as well as its well established core underground mining monorails business, SMT Scharf AG has been informed today by its core shareholders, Shareholder Value Beteiligungen AG and Share Value Stiftung, as well as Shareholder Value Management AG, that they are conducting a strategic review of their investment in SMT Scharf AG, “as they are of the opinion that other anchor shareholders would be better able to support SMT Scharf AG in its further growth, especially with regard to international markets.”
For this reason, the aforementioned shareholders have engaged Lincoln International, an M&A advisory firm, to assist in the search for a potential financial investor or strategic investor interested in acquiring a significant majority interest. The process outlined is currently at a very early stage. Hans Joachim Theiss, CEO of SMT Scharf AG, comments: “The Managing Board of SMT Scharf AG is open to the plan that our core shareholders have initiated. The Managing Board also in general highlights the commercial potentials for the SMT Scharf Group arising from an expansion of its business activities in the event of a takeover, particularly by a national or international strategic investor. In this context, economies of scale and synergy effects could lead to an even more positive corporate development. We, as the Managing Board, will consequently lend appropriate support to any such process, while appropriately safeguarding the company’s interests.”
The news comes after a good Q3 2021 for SMT Scharf reported in November. It increased its consolidated revenue by 46.1% to EUR53.9 million in the first nine months of the 2021 fiscal year. At the same time, the operating result (EBIT) amounted to EUR8.1 million, compared with negative EBIT of EUR -7.2 million in the corresponding period of the previous year. The operating result achieved in the first three quarters of 2021 thereby exceeds the EBIT of EUR 5.0 million to EUR 6.0 million previously forecast for the full year.
Hans Joachim Theiss commented: “The significant earnings growth mainly reflects the dynamic business trend in the current fiscal year, and especially growth in the Chinese market as well the recovery in our profitable new equipment and after-sales business due to the upturn in the sector business cycle. In particular, the approval of China III machines led to a positive EBIT contribution of around EUR4.2 million. Besides this, we assume that, following contractually required customer confirmations, further subsequent recognition of revenues can be implemented in the fourth quarter of 2021, which are expected to be reflected in an amount in the low double-digit million range in euros on the revenue side, and in an amount in the low single-digit million range in euros on the EBIT side.”
In the first nine months of 2021, SMT Scharf continued the positive revenue growth trend it has recorded since the start of the year in both its new equipment and its spare parts and service businesses. In the new equipment business, revenue in the reporting period amounted to EUR27 million, corresponding to year-on-year growth of 61.7%. Revenue in the spare parts and service businesses also recorded strong growth in a nine-month comparison. Here, the increase amounts to 32.5% to EUR 26.5 million. “In addition to the China III approval, the general improvement in the market environment contributed to this positive performance. Driven by a revival of the world economy, global demand for energy has risen significantly this year. As a consequence, commodity prices have increased overall, making mine operators more willing to invest in modern mechanical engineering technology for underground mining and to catch up on existing maintenance backlogs.”
Strong revenue growth in the African market was due to the order that SMT Scharf received at the end of last year from Polymetal International as part of its strategic partnership. Through the subsidiary in South Africa, SMT Scharf has now delivered the first electric-powered load, haul, dump machines (LHDs), and underground trucks to Polymetal in Russia in the third quarter.
SMT Scharf’s s main products include captivated railway systems that are deployed worldwide, primarily in hard coal mines, as well as in mines for gold, platinum and other metals. Such systems are required in order to transport material and personnel with payloads of up to 48 t and on gradients of up to 30 degrees. SMT Scharf also supplies the mining sector with chairlifts. Since 2018, SMT Scharf’s diverse portfolio has also included rubber-tyred diesel and electric vehicles for mining and tunnelling, including loaders, scissor lifts and underground trucks. As part of the further diversification of the business, the product range has been successfully expanded since 2019 to include electronic components and control systems for mining and other industries. Overall, the SMT Scharf Group is active with subsidiaries in eight countries, as well as commercial agencies worldwide. SMT Scharf generates a large share of its revenue in growing foreign markets such as China, Russia, Poland and South Africa.
