EuroBusiness Media (EBM): Wendel, one of Europe's leading listed investment firms, reports results for the full year 2012. Frédéric Lemoine, welcome, you are the Chairman of the Executive Board of Wendel. How was the year 2012 for Wendel and its portfolio companies?
Frédéric Lemoine: 2012 was another very good year for Wendel in spite of a difficult environment in some areas, notably in Europe. Our net asset value has risen by 56%, which is a very good result. The net asset value is the real value of the company assessed by the market prices of our listed assets. However, in terms of economic results, it depends on the companies. Some have grown very nicely – notably Bureau Veritas, Parcours or Stahl – because their activity was supported by a very good demand and very good product or service offering by the companies. At the same time, those of our companies that are exposed to the construction sector, notably in Europe, – Saint Gobain, Materis, Legrand – have been in a more difficult position, which explains that our net income by business sector has slightly reduced by 10.6% at constant scope. However, all in all, we had very solid results, more than €200 million of net results. We have improved our financial situation by reducing our gross debt and we still have a very solid cash situation.
EBM: In these 2012 results, there have also been some exceptional items. Would you care to comment them?
Frédéric Lemoine: Yes, there is a major item, which results from the sale of Deutsch, our American company, which is specialised in connectors. We had announced the transaction, we sold it to T Connectivity in late 2011, and we have closed the deal in April 2012. And there is a major capital gain of €689 million reported in our 2012 accounts. And on the contrary, we have also some write-downs because our companies took some asset write-downs, notably in Southern Europe, notably in Spain: Materis, Bureau Veritas or Saint Gobain. We also had to write down the Saint Gobain shares that we own from €53 per share in book value to €47 per share because of the relative slowdown of the activity of the company and its prospects, and also because of the increased tax rates that are imposed by all governments throughout the world.
EBM: There were also some investments that you made in 2012. Would you care to bring us up-to-date on some of the transactions that took place that were investments?
Frédéric Lemoine: The major investment we made was in IHS. It’s the first direct investment of Wendel in Africa. IHS is a tower telecom company active in Nigeria, Cameroun and Côte d’Ivoire. We have invested €176 million in IHS, and we are the first shareholder of this company which is really booming in a fast growing market, linked to the growth of the African continent. At the same time we have, as usual, helped our companies to invest in their external growth. There have been 26 acquisitions in the Group companies in 2012.
EBM: What are your comments on the recent announcement that Ernest-Antoine Seillière will be replaced by François de Wendel as the Chairman of the Supervisory Board of Wendel?
Frédéric Lemoine: It’s a major step for our Group because Ernest-Antoine Seillière has been the leading figure of our Group since the mid-70s. He has really been the new founder of Wendel and has led the company operationally for nearly 30 years. So he was non-executive since 2005, but he was still here helping us as the Chairman of the Supervisory Board. And I want to thank him on behalf of all the employees, of all our companies, and on my personal behalf for the exceptional contribution he brought to the development of Wendel. But now we have François de Wendel as the Chairman of the Supervisory Board. We have a renewal but in the continuity of the Wendel family. Because François was the Vice-Chairman of the Supervisory Board before, he is the chairman of Wendel Participations, the family company that owns 35% of Wendel – so he’s perfectly aware of the company. He’s a former industrialist himself, having worked with Carnaud or Pechiney, so he knows us well. We have his full support and the full support of the Supervisory Board for the strategy to come.
EBM: Wendel’s Supervisory Board has also renewed your mandate for the next four years. In a few words, what are some of the main features of your growth and investment strategy for the coming years?
Frédéric Lemoine: Over the last four years, we have significantly improved the financial situation of Wendel. We have reduced the debt by half and we are now in a very sound cash situation, being able to invest €2 billion in the coming four years. So it’s very significant. It will enable us to lead a strategy of diversification in new sectors, in new geographies, and with a clear priority to unlisted assets. We’ll do that equally in three geographical regions. Europe, which is our main territory: France, Germany, Benelux, clearly, in companies that are exposed to the global world and to emerging countries. We’ll do that for one third in North America. We want to continue the very nice story of Deutsch. We are convinced that we are long-term investors that are friendly for family-owned companies. And we’ll do that again in Africa or in other fast-growing regions because we know that we have a card to play in this region accompanying companies for the long-term.
EBM: And what is your ambition for the financial structure of the group in the coming years?
Frédéric Lemoine: We will be very rigorous. We have done a lot again in 2012 to improve our financial situation. We’ll carry on with this policy. Our aim is to become investment grade in the next four years, that means to have a loan-to-value ratio (the ratio between the amount of our loans compared to the amount of our assets) below, and significantly below, 35% in a sustainable way. So we’ll be very active on this front as well.
EBM: Your share price is currently at a discount to net asset value of around 36%, which is a historically high discount. What are your views on the current stock price?
Frédéric Lemoine: It’s the right time to buy. And that’s exactly what the company does. The market decides what the discount on our NAV should be. When it’s 35%, which is much higher than the average over the last years, we think it’s an opportunity to buy. We have bought a lot of our own shares in 2012. We have cancelled 2% of the capital and we still have 2 million Wendel shares on our balance sheet. So we’ll continue to do that and encourage everybody to do that.
EBM: You propose a dividend increase of 35% to €1.75 per share. Have you decided on a dividend policy for the coming years?
Frédéric Lemoine: Yes, it will not be plus 35% every year. This is exceptional because we wanted to show our trust in the future. We are in a very good situation. We believe it should benefit also our shareholders. However, in the future, our aim is to increase regularly the dividends distributed so that we can create value for all our stakeholders.
Frédéric Lemoine, Chairman of the Executive Board of Wendel, thank you very much.
Frédéric Lemoine: Thank you very much.
