Bolloré half year results financial analyst meeting feedback
Patience, cash+UMG+Vivendi and let's not forget the self controlling loop!
Recall that Bolloré in stand alone has a net cash position of 1.4 billion euros.
The sale of 100% of Bolloré logistics to CMA CGM should be completed by the end of the year or early 2024.
Bolloré Logistics has been reclassified as a discontinued operation (IFRS 5) and is therefore not included in the presentation.
The Vivendi-Lagardère merger project is one of the biggest catalysts for Vivendi.
Reminder that Compagnie de l'Odet holds 70.8% of Bolloré after the tender offer on Bolloré shares (represents 3.4% of treasury shares).
We own 28.4% of UMG: 18.10% by Compagnie de Cornouailles, a 100% subsidiary of Bolloré SE, 0.33% by Compagnie de l'Odet and 9.98% by Vivendi.
For Bolloré Energy, 2022 was an exceptional year. The Petite Couronne unit is beginning to have satisfactory results.
The drop in UMG's EBITA is due to the equity plan. Otherwise the operating result is very good.
The net cost of financing improved from -€30m in H1 2022 to +€10m in H1 2023 due to the increase in liquidity and the rise in rates.
Other financial expenses and income are at -€100 million due to the impact of the equity plan at UMG level.
There were €1,291 million of acquisitions of financial assets (50% related to the takeover bid on Bolloré, the balance for UMG, Viu and Multichoice).
Review of activities
Bolloré energy: the Petite Couronne is gaining momentum. Acquisition of Sicarbu Ouest (Brittany and Loire Atlantique).
Vivendi: Gameloft has good momentum. GVA (fiber infrastructure in Africa) also has very good momentum.
UMG: the dividend is stable and has performed well on the stock market. Reminder that Canal + is present in West and French-speaking Africa while Multichoice is present in East Africa and in Southern and English-speaking Africa.
Via play has 6 million subscribers.
UMG is now a very important holding for Bolloré and Vivendi. Adjusted EBITA (from the equity plan) was €1,112 million.
Industry (Battery and IER): for batteries, the order book is satisfactory. For electronic components it is always complicated because the automobile has taken
IER performed better but suffered a cyberattack in June.
For the portfolio of listed securities, it is reminded that the Lagardère holding can rise from 57.8% to 70% depending on the share subscription warrants. For Socfin, reminder that there is an offer of
withdrawal at €30.75. And we must also add the 3% held in Nacon following the distribution of shares.
Q: Can you give us an update on the strategy part in relation to Bolloré Energie? Can you tell us more about the partnership with Stellantis?
A: The domestic fuel oil is a market that is down by 6 to 8% due to the energy transition but also because people have less money. Off site energy is useful. If we eliminate fuel oil, we would have to double or even triple the production of nuclear power stations. We do not emit more than gas. The margin rate increases faster than the turnover.There are fewer and fewer competitors. In M&A, the idea is to buy out competitors. The Petite Couronne depot supplies the Seine valley and we are present in the North of France. During the strikes, our deposits were less
affected than those of our competitors. We carry out energy transition projects. We have an entity that does energy renovation. We distribute new ecological products. Changing a burner costs 600€ which is much cheaper than installing a heat pump.
Stellantis: it is a laboratory agreement where we invest in common. The big driver of energy storage is the car industry. We are talking with prospects and we should have some news in the next 18 months. We are the only ones to have an industrial process. If in 18 months it does not work, we will have to change gear.
The plastics activity is no longer far from profitability (within 2 years). We manufacture the finest plastics in the world.
Q: What is your investment philosophy regarding UMG? For Vivendi, it was announced that there would be no share buybacks. The share price is trading at a discount, why not buy some and sell them in 2 years. For the Bolloré Group, historically there are two pillars/activities. Are you looking for a second pillar?
A: We are happy with UMG. It is a good investment with good potential. There is a focus to continue to be a good number 1 and with a good battle in publishing (against Sony).
The weight of streaming continues to rise, they will
go to emerging countries (Africa…). I validate the catalog purchase, to take market share. Streamers are coming back to us and they have deleted songs that were not needed or did not work. UMG has plenty of ideas with the superstars. We are confident in UMG. UMG needs a base of long-term investors who validate LT investments. We prefer the development of the company rather than the repurchase of shares.
For Vivendi, there is a 40 to 47% discount on the NAV according to analysts' notes. If we buy back shares we would have to sell them. The management is working on the development of the company. Lagardère is weighing on Vivendi's share price due to uncertainties with the European Commission.
Yes clearly a diversification is planned, we have ideas but we will not tell you. It should be remembered that we have not yet received the money from the logistics sale (the sale should be effective in January 2023). The cash position is nice to have. We try to see where we can bring added value.
We prefer to be patient to reinvest.
With the rise in rates, there will be opportunities but there is still a lot of work to do with the sale of logistics. Going into another industry is of great interest to us.
Q: Is there a loss budget for the industry (Battery from my understanding) over the next few years. We have observed that you made a small withdrawal of 5% from Socfin on the occasion of the withdrawal offer. Have you withdrawn from Socfin?
A: Yes there is a loss budget but we will not give you the figure. It should be remembered that there was a significant Covid impact. We will not continue with this level of loss for 10 years.
For Socfin, we actually sold 5% at the offered price but we don't want to withdraw from Socfin. They have done a great job of reducing their debt.
At the end of January 2024, we will have 6 billion euros in cash + UMG + Vivendi.
My personal opionion
Let’s be patient, the Bolloré have lots of options and their cash position enables them to have lots of opportunities.
On an other note, be ready for a surprise from French Hidden champions in september!
In the meantime, thanks again for signing up and feel free to talk to your friends / fellow investors about the French Hidden Champions Substack. You can also reach out by email or by DM on Twitter @FoxCastlehold.
Disclaimer: The above article constitutes the authors’ personal views and is for entertainment purposes only. It is not to be construed as financial advice in any shape or form. Please do your own research and seek your own advice from a qualified financial advisor. The authors may from time to time hold positions in the aforementioned stocks consistent with the views and opinions expressed in this article. Disclosure – I hold a position in the Bolloré Galaxy at the time of publishing this article (this is a disclosure and NOT A RECOMMENDATION).