Dear partner,
You’ve no doubt read plenty about the wild swings the stock market has taken in recent weeks—and the causes behind them. Don’t ask us for a short-term outlook, because that’s simply impossible. We’ve seen a lot of interesting theories that explain certain movements, but by the next day, they can already be outdated.
What we come up with and write on Tuesday morning might already be ready for the bin by Tuesday evening. That’s why our focus needs to stay on our companies. Can they handle whatever the future brings? That’s why, in this letter, we’ll focus on the annual results of our largest holdings.
Still, we’d like to briefly return to something we mentioned in our January letter, where we wondered when our often smaller European family businesses would come back to life and be fairly valued again.
Meanwhile, Trump is doing everything he can to damage confidence in the United States. Yet even with that, it’s clear that a revival of European small- and mid-sized family businesses is still not happening.
A striking example is the big market swings caused by the tariffs Trump imposes on other countries. When he announced a 90-day pause for all countries except China—where the tariff actually rose to 125%—the markets jumped 10%. Apple rose 10% along with the indexes, even though Apple is directly hit by that 125% tariff on China. Most of their products are still made in China, or contain components sourced from there.
The fact that Apple still rose 10% instead of falling shows that the market is still data- and index-driven. Independent, thoughtful investors are still not the ones driving prices. It’s the ETF investors who are setting short-term prices, jumping in with enthusiasm.
Even though the S&P500 has already dropped significantly—and we can now officially call it a crash (over 20% down from the top)—investor sentiment hasn’t caught up to that reality yet. As long as we keep hearing euphoric slogans like “buy the dip” and see money flowing into ETFs every time the market bounces, the sentiment isn’t bearish enough—regardless of what CNN’s Fear & Greed Index says.
And when money does flow into Europe, it’s still mostly index- and ETF-driven. The strong rise in the DAX hasn’t been reflected in the broader market.
In short, for now, we continue to believe that returns will have to come from the actual performance of our companies—not from a market revaluation just yet.
A brief look at the future
We don’t have a crystal ball, and we won’t pretend to have better insight into the future than anyone else. We certainly don’t base our investment decisions on that. Still, we’d like to share a short view on how we see things developing.
Trump continues to make strange decisions. If he keeps that up, the average American will sooner or later be faced with high inflation—and possibly even a recession. Although Trump wants more production to return to the U.S., the country simply lacks enough production capacity and labor to make that happen.
In short, all the fuss around trade tariffs is largely bluff—and China is calling it.
Of course, we shouldn’t underestimate the United States. With this kind of behavior, they can absolutely drag the world into a recession. But the impracticality of such extreme tariffs was captured perfectly by Howard Marks:
But let’s assume that the stated goals are actually achieved—that more of the goods bought in the U.S. are also produced in the U.S.:
- First, in most cases, there simply isn’t enough production capacity to ramp up. I doubt, for example, whether there’s even a factory in the U.S. capable of producing flatscreens for TVs or computers. It would take years to build enough capacity to meet a significant portion of U.S. demand, which means that in the meantime, shortages would arise and/or prices would remain at previous levels—plus import tariffs.
- Second, the new factories needed to bring back manufacturing jobs would take years to permit and build, and the construction costs would have to be justified by profit expectations far into the future. That adds a layer of complexity to decisions already made difficult by the uncertainty surrounding future developments in automation and AI. Will CEOs really commit to those investments based on tariffs that could easily be renegotiated—or scrapped entirely—when a new administration takes office? Keep in mind that Trump’s 25% tariff on Mexican and Canadian goods replaced the U.S.-Mexico-Canada Agreement that he negotiated during his first term, which went into effect in 2020. That deal itself replaced NAFTA, which had been in place since 1994.
- Third, there likely aren’t enough skilled workers available in the U.S. to replace all the workers in China and other developing countries who currently produce goods for us.
- Fourth, why do Americans import goods in the first place? Because they’re cheaper. Why were the jobs lost in the U.S. in the first place? Because American workers were paid more than workers elsewhere for the same work—but U.S. products weren’t good enough to justify the higher retail prices. That’s why the U.S. went from importing 330 Volkswagens in 1950 to more than 400,000 in 2012. It wasn’t because U.S. tariffs were too low. The simple truth is that foreign goods often cost less than similar goods made in the U.S. Even if future tariffs are high enough to make U.S.-made goods cheaper than imported goods plus tariffs, the prices in absolute terms will still be higher than what Americans are used to paying. For example, this morning on TV, it was said that a smartphone made in the U.S. could cost as much as $3,500.
Since most Americans have little income left after covering basic needs, higher prices would likely lead to a decline in living standards. That’s right—unless wages rise just as quickly as prices. But in that unlikely case, we’d be looking at a dangerous inflation spiral.
What does this mean for us?
In our January newsletter, we concluded that a significant number of jobs would first need to be lost in the United States before the strong rise in passive investing—and with it, the upward movement of the indexes—would reverse. That now seems less likely.
If people can no longer maintain their standard of living because of much more expensive products, they’ll be able to save less, and therefore invest less in the stock market. For larger purchases, they may even need to dip into their savings. That could put pressure on the U.S. stock market—or at the very least, cause it to move sideways for a long time.
We also expect interest rates in the U.S. to continue rising, despite Trump’s efforts to push them down. The reason seems straightforward: confidence in the United States is falling, and with it, confidence in U.S. government bonds.
Those rising interest rates will also impact American consumers—who, as we know, rely much more heavily on credit than we do here.
In short, we remain satisfied with our European companies—even though they, of course, are also exposed to the U.S. market. Their management teams will simply have more work to do.
If investors start shifting their attention away from the U.S., does that mean our companies will suddenly take off? We don’t know. For the past two years, we’ve watched with growing disbelief as the valuations of our companies kept falling. Even now, our portfolio continues to decline—despite already being extremely cheap. Although it’s declining less than before, which makes sense, given the difference compared to last year.
One striking trend we’re seeing more and more in our companies is insider buying—or new parties stepping in with significant investments. We’re noticing a shift from players who were mainly active in private equity, now moving into the public markets—simply because listed companies are cheaper than comparable private ones.
With our small companies, we may benefit from that here and there. The takeover bid for Smartphoto is one such example.
Investors who have mainly focused on the U.S. will likely only follow later. They’ll return to value-based investing—not momentum-based—only after prices have already risen considerably. For us, the question isn’t if that happens, but when. Unfortunately, that’s the one question we don’t have the answer to either.
Evolve and grow
The fact that we don’t have the answer to the question above—combined with the feedback we’ve received from you, our partners—has made us reflect. How can we move forward without compromising our values or going beyond our area of expertise?
We’re confident that we’ve found the answer. We have a concrete plan that we’re genuinely excited about. We’ll contact our partners to explain and get your feedback.
The Fund
Whether it makes sense to discuss the results of the first quarter is debatable. After all, more has happened in the first two weeks of April than in some entire years.
In the first quarter, our fund rose by 0.54%. Given the market conditions, that’s a result we’re neither satisfied nor dissatisfied with.
Looking at returns up to today, we see a decline of 1.4%. However, by the time you read this letter, that could have shifted by several percentage points in either direction. What stands out is that our decline has been more limited than that of many others. That makes sense—after all, we didn’t participate in last year’s rally either.
Before we dive into more detail on the past quarter, let’s first take a brief look back at 2024.
Look back at 2024
Now that we’ve received the full-year reports from our companies, we can provide an accurate overview as of December 31, 2024.
We look at our companies from two angles:
- How are they priced relative to their book value?
- How are they priced relative to their 2024 earnings?
Let’s start with the book value:
The table above shows the evolution since the fund’s inception. In the pink column, you’ll see the book value of our companies: this is the total of their assets minus liabilities, plus the cash held in our account. This value is shown at year-end for each year since the start of the fund.
The green column shows the Net Asset Value (NAV), or the market value of our shares. The columns on the right present the same data, but expressed per share of the fund. As of 31/12/2024, there were 18,242 shares in circulation.
What interests us most is not the absolute amount, but the ratio between the NAV and the book value. This allows us to track the price-to-book ratio of the fund. The graph below displays the per-share values, making it easier to compare across years.
The black dotted line becomes relevant starting in 2021; before that, the fund was still in its build-up phase. In 2022, the NAV took a hit from which it hasn’t recovered. Meanwhile, the book value of our portfolio has continued to rise steadily. As of 31/12/2024, we observe that our companies are trading at just 0.84 times their book value.
Let’s now do the same exercise for earnings:
Profits are generated by companies—not by the cash sitting in our account. That’s why, for this exercise, it makes sense to exclude cash when calculating the price-to-earnings ratio.
We find that the price-to-earnings ratio is currently at a historic low: 8.7. Our companies are reporting higher profits year after year, while the market is placing less and less value on them.
This isn’t a new observation—we already shared a preliminary analysis in October last year. The current figures now confirm that picture, based on the full-year results of our companies.
We continue to estimate that our quality companies are worth around 1.5 times book value and 14 times earnings. Based on this top-down analysis, we conclude that the fair value of our portfolio is about 60 to 75% above the current NAV.
As always, we also carry out a bottom-up analysis, starting from the valuation of each individual company. This includes the developments we’ve seen in the first quarter.
Results T-Class
Despite the limited increase in the NAV during the first quarter, we were able to carry out a few transactions that increased the intrinsic value. As a result, the gap between the fund’s price and our estimate of its intrinsic value grew to over 80%.
Results A-Class
The results of the A-class and T-class have been identical in recent years. The only difference is the performance fee, but since that hasn’t applied in the past few years, the results are the same.
Biggest contributors to the result
Biggest detractors to the result
Biggest weight
Transactions
In the first three months of 2025, we sold Mynaric and Vicat, and we bought Trigano.
The position in Mynaric was closed. From the start, this was a binary bet—it could either deliver significant returns or go to zero. Unfortunately, it turned out to be the latter. Most of the loss was incurred last year. Because of the underlying risks, the position was very small—just 0.5% of the fund at the time of purchase—so it had no material impact on the fund. We took this binary bet because, on the stock market, the most you can lose is 100%, but the upside can be thousands of percent.
That there were games being played behind the scenes—and that a strange German law, similar to our own Business Continuity Act, ultimately sealed the company’s fate—no longer matters to us. What does matter is the lesson we’ve learned: even when everything seems to line up, we should stick to what we know. Stick to your craft.
The position in Vicat was sold after just six months with a gain of 48.8%. Much faster than we had expected, the market recognized that this cement producer was undervalued. At 90% of fair value, we saw better opportunities elsewhere, where we felt our money could be put to better use.
The proceeds from the sale were invested in Trigano. Trigano is a European specialist in leisure vehicles. It began in 1935 with the sale of tents and has since grown into a leading builder of motorhomes, caravans, and other holiday-related products. Along the way, Trigano acquired brands such as Chausson and Adria, gradually building up an impressive portfolio.
Trigano’s core business is the production of leisure vehicles—mainly motorhomes, caravans, and mobile homes. This segment accounts for around 95% of revenue, with motorhomes making up 79.7% of the total.
Trigano is the market leader in Europe and clearly doing something right. Its profit margins are higher, returns on equity and capital are significantly stronger, and in terms of growth, it leaves the competition behind. On top of that, Trigano is also cheaper than its peers.
Of course, Trigano carries cyclical risk—especially given the challenges Europe is facing. However, at this price, Trigano doesn’t need to grow. Even if margins were to drop by 20%, it could still deliver an annual return of around 12%, purely from its business operations.
The increase in intrinsic value is the result of the new purchase of Trigano and the sale of Mynaric, which was valued at zero in our books.
The sale of Vicat did occur below our estimate of its intrinsic value, which led to a small decrease in our overall intrinsic value—but as mentioned above, we prefer holding a share with more potential in its place.
Our Companies
In our previous report, we reviewed our ten largest positions, providing a short description, the reason for each investment, and our valuation. As promised, we’re including three more in this report.
We also take a closer look at the results of our largest holdings.
Sofina
Following recent price movements, Sofina became the third-largest position in our portfolio—without us purchasing any additional shares.
Short description
With Sofina, we invest alongside the wealthy and noble Boël family, who control 54.6% of the company through several entities. Led by CEO Harold Boël and with Nicolas Boël on the board of directors, they hold significant influence over the company’s direction.
As a holding company with a history of over 120 years, Sofina takes a long-term perspective. They explicitly state that they invest with future generations in mind.
Sofina follows three investment strategies. The first involves long-term minority stakes, primarily in European companies, with investments ranging from €75 to €200 million in businesses valued between €250 million and €3 billion. These can be either private or listed companies but must have a long-term reference shareholder. This category represents 31% of Sofina’s equity. Notable holdings here include team.blue, Drylock, Collibra, Cognita, and Mérieux NutriSciences.
Together with investments in “Growth,” Sofina classifies these minority holdings as “Direct Investments.” Sofina Growth represents around 23% of its equity and focuses on fast-growing companies and sectors, with investment sizes between €20 million and €100 million per position. Examples include Vinted, Mistral AI, Bytedance (TikTok), Too Good To Go, Typeform, and more.
Sofina Private Funds account for about 46% of Sofina’s equity. In this branch, Sofina works with specialized investment teams with whom it has long-standing relationships. Through these partnerships—with firms like Sequoia, Lightspeed, Everstone, and Founders Fund—they participated early in companies like YouTube and Facebook. This segment is primarily focused on investments in America and Asia and includes exposure to AI through companies like OpenAI, xAI, Anthropic, and Databricks.
Why we chose Sofina
The success of the experienced private equity players Sofina partners with is a key reason to invest. The network they’ve built over decades is clearly bearing fruit.
Many of the Growth investments stem from these connections. On top of that, their track record in minority stakes is impressive.
Comparing Sofina’s performance to the MSCI World Index, we see Sofina delivered slightly lower returns over the past ten years—9.9% per year versus 10.3% (as of June 30). As you know by now, I believe the MSCI World is overvalued today, while Sofina is trading at an attractive discount.
Our valuation
Given Sofina’s significant exposure to private equity funds, growth companies, and mostly unlisted minority holdings, valuing the company is a complex task. That complexity is compounded by the number of assumptions and estimated values involved. Sofina books its investments based on recent transactions and capital increases, which can lead to a wide gap between reported and actual value.
That’s why we mainly rely on Sofina’s own Net Asset Value (NAV) calculation, while applying our own adjustments or safety margins where needed.
Sofina reports a NAV of €312 per share. After applying a small discount to the private equity funds, we arrive at €300 per share.
Wickes
Wickes became the tenth-largest position in our portfolio as of March 31, due to a rise in the share price and declines in Stellantis, Kamux, and X-Fab. We won’t discuss Smartphoto—previously the ninth-largest—since we recently sold that position. In the current market environment, holding cash is more valuable than waiting for a potentially higher takeover bid.
Short description
Wickes is a UK-based home improvement chain—though they prefer that term over “DIY,” as their focus is broader than just the typical handyman market.
The company was spun off from Travis Perkins (TPK), a listed distributor of construction materials and tools. TPK wanted to focus more on professional clients, making Wickes no longer a strategic fit—even though it accounted for 20% of TPK’s revenue.
Wickes operates in two main segments: Retail and Design & Installation. Retail includes the traditional DIY business, with a strong online presence and partnerships with local contractors.
Wickes focuses on a curated, high-quality product range, consisting of major brands and private labels. They prioritize simplicity and efficiency over quantity. On average, their stores carry 9,500 products, while their online offering is 17,500. For comparison, competitor B&Q (part of Kingfisher) offers over 40,000 products—and keeps expanding. This highlights the difference in strategy.
The advantages for Wickes include simpler inventory management, lower handling costs, and less store space required—allowing them to keep prices competitive. Wickes also turns over its inventory nearly twice as fast as B&Q, which is a major advantage in retail.
Online, Wickes offers both delivery and in-store pickup. Their “click & collect” system promises pickup within 30 minutes—a strong point. That said, we believe this digital lead may only be temporary.
The Design & Installation segment focuses on professionally installed kitchens, bathrooms, and solar panels.
Why we chose Wickes
The construction and home improvement sectors are closely tied to general economic conditions—and the UK is no exception. Historically, the building materials and tools market has grown at 2.5% per year, reaching £25 billion.
This growth outpaces GDP growth. Wickes’ management points to a few drivers:
- An aging housing stock—80% of UK homes are over 30 years old—driving renovations
- A decline in people capable of doing DIY work, which supports the DIFM and local trade segments
- Increased home sales, which tend to drive renovations
- The ongoing trend of spending more time at home post-pandemic, leading to a desire to improve living spaces
At the time of purchase, Wickes was trading well below its reproduction value—that is, the amount a competitor would need to build a similar company from scratch. In other words: it was cheaper to buy Wickes than to compete with it.
Our valuation
We bought Wickes because the stock was clearly oversold following its spinoff from Travis Perkins. The company’s small market cap and challenging market conditions have prevented a recovery—for now. In the meantime, we’re looking at returns from buybacks (6%) and dividends (6%).
A total return of 12% for relatively low risk is acceptable for now. Still, we do want to see a clear improvement in the Design & Installation segment once the market improves.
If we value Wickes using a DCF model, the current free cash flow—assuming zero growth and zero terminal growth—still points to a value of £3.65 per share.
However, we conservatively value it at £2.90, applying an extra margin of safety because retail margins are thin and free cash flow can fluctuate significantly with a few setbacks. Also, the current free cash flow isn’t from a peak year—it was double this during strong years.
Semapa
Semapa is the 13th largest position in our portfolio, with a 2.97% weighting at the end of March.
Short description
Semapa is a Portugal-based conglomerate active in various sectors, with its main activity in the paper and pulp industry. It’s a key player in the European paper and pulp market, with a solid presence in other sectors as well.
Its main subsidiary is The Navigator Company (formerly Portucel Soporcel), one of the world’s largest producers of uncoated wood-free paper. Navigator offers a wide range of products, including printing and writing paper, packaging paper, tissue, and specialty pulp.
Outside paper and pulp, Semapa is also active in cement, renewable energy, environmental services (including hydrogen), and growth investments.
The Cement division, operated through Secil, has actually been part of the business longer than the paper segment. In 2004, they sold part of Secil and later bought it back—with the proceeds used to acquire Navigator (then still called Portucel).
Why we chose Semapa
Semapa always seems to trade cheaply. The sectors it’s involved in are not particularly attractive—cyclical and just past their peak—or so I thought.
The stock trades at just over half of what I estimate to be fair value, or in other words, at 5.4x earnings and 0.79x book value. A strong potential—likely only to be unlocked in one specific way.
The family, which now owns 88% of the shares, has already tried twice to delist the company. Given the current valuation, this seems like a perfect opportunity for a third attempt.
Our valuation
In theory, Semapa could double our money in five years. In practice, I don’t expect that to happen. The family will likely try again to take the company private—and probably won’t wait until the fair value is reached.
The longer they wait, the lower our return will be, of course.
One thing bothered me in the report: if they were planning to make an offer, they would normally highlight the drop in net profit to make the deal cheaper. They didn’t. They just mentioned the absolute figure, without stating the percentage drop—a well-known trick to downplay weaker results.
That said, the results aren’t really weak if you look at the two main businesses. The issue lies with the rest, and that’s not a big concern.
I’m not planning to wait five years. There’s no reason to sell now, but it’s definitely a stock I’ll keep in mind to cash out of when a better opportunity comes along.
Results of our largest positions summarized
Cake Box
Cake Box has a broken financial year, so we’ll have to wait a bit longer for the full-year figures. However, they have made a significant acquisition. Cake Box has acquired Ambala Foods, a specialist manufacturer and retailer of Asian sweets, better known as mithai.
Ambala operates 22 stores, 19 of which are company-owned and 3 franchised. It is a family business and a well-known brand within the British Asian community.
With this acquisition, Cake Box significantly expands its product offering.
Cake Box is paying a total of £22 million for the stores and the production facility in Welwyn Garden City. The facility represents £6 million of the total amount, which corresponds to the market value of the buildings and machinery.
Tessenderlo
Tessenderlo’s revenue fell by 9.6% to €2,647.7 million. Since the decline in the second half of the year was limited to 3.3%, there is hope that the bottom may be in sight.
The Agro division saw revenue increase by 3.6% to €822.4 million. Price pressure during the first half of the year thankfully eased in the second half, allowing margins to recover. Thanks to the absence of a significant inventory write-down that occurred last year, operating profit in this division rose by 250% to €33 million.
In Bio-Valorization, revenue declined by 14.8% to €618.8 million. Although volumes increased, lower prices across various products led to the revenue drop. The combination of higher volumes at lower prices, expensive inventories due to high energy and raw material costs, and the negative impact at Akiolis from the bluetongue epidemic in France resulted in an operating loss of €30.1 million.
Industrial Solutions recorded revenue of €670.7 million, a decline of 5.4%. The weak construction market particularly impacted DYKA’s plastic piping business. Operating profit fell by 39.6% to €28.6 million.
The former Picanol, now known as Machines & Technologies, saw revenue fall by 25.9% to €461.4 million. Market conditions here are extremely difficult, and it is uncertain how long this weakness will last. Picanol’s machines remain world-class, so once the market recovers, revenue should follow. The continued revenue decline led to a 60.7% drop in operating profit, down to €11.9 million.
Remarkably, this division previously generated enough free cash flow to gain control of the entire Tessenderlo group. For Picanol shareholders, the timing of the merger appears excellent. It also highlights that this division is a true cash flow generator in good times, even though it’s currently going through a deep cyclical downturn.
At T-Power, revenue declined by 3.1% to €74.4 million, and operating profit dropped by 8.3% to €20.3 million.
The group’s adjusted operating profit fell by 46.8% to €63.8 million. This figure does not include restructuring costs at PB Leiner (gelatin) in the UK and Belgium (€40.5 million), nor a few smaller restructuring charges and fire damage (€6.8 million).
The unadjusted operating profit therefore dropped by 86.3% to €16.5 million. Thanks to positive exchange rate effects, net profit ultimately came in at €44 million.
Operating cash flow increased by 52% to €333.2 million, mainly due to a reduction in working capital, which returned to a normal level.
A total of €180.6 million was invested, half of which went into growth projects that had already been announced via short news updates. In addition, around €100 million went toward share buybacks, dividends, and withholding tax—directly benefiting shareholders.
Exor
The Net Asset Value (NAV) per share of Exor rose by 9% in 2024 to €178.80, while the share price actually declined by 2.15% over the same period.
As I’ve written before, Exor is relatively easy to value, since around 80% of its worth consists of listed companies that we can track closely. Broadly speaking, Ferrari is on the expensive side, while Stellantis and CNH are undervalued. Philips also appears to be trading at a discount at the moment.
In short, the NAV doesn’t differ much from the true fair value. But that exact fair value becomes less relevant when the share itself can be bought at nearly half of NAV.
In 2024, Exor received €1.5 billion in dividends and proceeds from divestments. Of the €1.1 billion in dividends, nearly €700 million came from Stellantis. Due to Stellantis’s dividend cut, this number will be lower this year—but this is offset by the €3 billion Exor received from reducing its stake in Ferrari.
Exor also made several investments throughout the year, including expanding its holdings in Philips, Clarivate, TagEnergy, and Institut Mérieux—moves we’ve highlighted in previous updates. The company has stated that it plans to continue focusing mainly on further investments within its existing portfolio.
All segments within Exor contributed positively. Among the listed companies, it was a challenging year for Stellantis, CNH, and Clarivate, but this was more than offset by strong share price gains in Ferrari, Philips, Juventus, and Iveco.
Among the unlisted companies, Louboutin was the only significant decliner, which isn’t surprising given the pressure on the luxury sector. Lingotto Funds and Ventures also delivered positive contributions.
All in all, a strong year.
Exor has also announced a €1 billion share buyback program, which, at these share prices, is something we can only applaud.
Sipef
Sipef has become our fifth-largest position, up from tenth at the start of the year.
The price of palm oil can make or break a year, and with an average price of $906 per ton in 2024, prices were again relatively high. This was driven by strong global demand and a decline in supply from Indonesia.
Sipef sold its oil at an average price of $867 per ton. Since they sell in advance, prices are slightly lower in exchange for price certainty.
Production at Sipef declined by 7.4% in 2024, mainly due to the volcanic eruption in Papua New Guinea in November 2023. In addition, 2023 had been a dry year, and the natural production cycle also played a role—strong years are typically followed by weaker ones, as the trees need time to recover. All of this impacted 2024 production.
Remarkably, the areas affected by the volcanic eruption have already been fully rehabilitated—practice makes perfect. Still, production in that region dropped 22.1% in 2024. This decline offset the growth in South Sumatra, where more and more newly planted areas are reaching maturity.
Banana production increased by 24.6%, thanks to investments and expansions, although the original plantations struggled due to poor weather conditions.
Revenue for 2024 came in at $443.8 million, roughly flat compared to the previous year. However, the cost of goods sold was lower, leading to an improvement in the gross margin.
Still, operating profit fell by 3.6% to $104.1 million. This was partly due to a $6.4 million impairment on PT Melania, the rubber plantation for which a sale agreement had been signed. However, the buyer sent Sipef a letter terminating the agreement—something Sipef has, of course, contested.
The write-down from $13.5 million to $7.1 million suggests that Sipef believes the current value is lower—likely the reason the buyer made this move. Presumably not to cancel the deal entirely, but to negotiate a discount.
There was also an additional $1.4 million impairment on several plots that were replanted earlier than scheduled. In 2023, there had actually been a positive revaluation. Taken together, these factors caused operating profit to decline despite the higher gross margin.
On top of that, negative exchange rate effects weighed on results, bringing net profit down by 9.5% to $65.8 million, or $6.33 per share. All things considered, still a strong year.
Luceco
Luceco’s revenue rose by 16% in 2024 to £242.5 million. The acquisitions of D-Line and CMD clearly contributed to this growth, but even on a like-for-like basis, revenue increased by 5.8%.
This organic growth is largely due to international expansion, which, after years of effort, is finally starting to pay off. Notable growth came from Dubai (+28%) and Ireland (+55%). The UK remains by far the largest market, where organic revenue rose by 2.1%—a strong result considering the broader market shrank by approximately 2.4%. In other words, they are gaining market share.
In the Wiring Accessories segment, revenue grew by 31.8% to £108.9 million, largely driven by the acquisitions. However, those same acquisitions also led to a 2.6% drop in operating profit, down to £14.6 million, due to initial integration costs.
The LED Lighting segment saw revenue fall by 0.8% to £78.4 million. Operating profit dropped by 15.6% to £2.7 million, mainly due to lower contributions from infrastructure projects and rising labor costs.
In Portable Power, revenue increased by 16.5% to £55.2 million. Within this segment, EV charging solutions stood out with a 25.6% rise. Operating profit here increased by 51.4% to £5.6 million.
Total operating profit grew by 4.5% to £23.2 million. The company also refers to an “adjusted operating profit,” which they say increased by 20.8%, excluding acquisition-related costs, impairments of intangible assets, and currency effects. However, I disagree with this approach: if strategic acquisitions are part of your business model and you operate a factory in China, then these costs are simply part of the business.
Net profit declined by 12.6% to £14.6 million. Higher interest expenses, caused by rising debt from acquisitions, offset the gains at the operating level. The remaining drop was due to higher taxes.
Kind regards,
Sam & Joël