Intro
Mayr-Melnhof Karton (MMK) is a leading global manufacturer of cartonboard and folding cartons active in 33 countries with around 15,000 employees. MMK operates in three divisions: Pharma & Healthcare Packaging, Food & Premium Packaging and Board & Paper. The company promotes sustainable development through innovative, recyclable packaging and paper products.
MMK has been listed on the Vienna Stock Exchange since 1994 and is still controlled by core shareholder families, who own roughly 58% of the share capital. The remaining 42% is free float.
Valuation
Especially in 2021 to 2023, Mayr-Melnhof has been very active in buying other companies (for example Essentra Packaging) or incurring large investment programs (for instance currently at its paper mill in Kwidzyn in Poland). Through these activities, net debt has increased from around €200 million in 2019/2020 to more than €1.2 billion in 2023.
Leverage ratios have also increased and ought to be reduced in the coming years again.
Historically, MMK has earned a bit less than €10 per share, which would translate into a normalized P/E ratio of around 8x under the assumption that they will return to at least the same profit levels as in the past. The P/B ratio sits also at a rather low value of 0.83x.
What’s next?
The business model of Mayr-Melnhof can be quite cyclical and due to some overcapacities currently prevailing, earnings seem to be distressed, and the firm also lowered its dividend.
The recently done acquisitions will need to be digested but there is little doubt that the company won’t make it through the current downturn, as there have been many since the founding year in 1888.
Although MMK is already a market leader, there is still a lot of room to grow organically but also through further acquisitions.
Now seems to be a good time to step up to the plate.
Current Price
€84.10 per share
Disclosure
The author is currently neither long nor short Mayr-Melnhof.
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