We hosted Semperit at our Paris conference. The company re-confirmed M&A ambitions until end of FY27e (eNuW) while emphasizing its positioning ahead of cyclical upcycle. In detail:
Margin defence in focus for H2 26e. The high operating EBITDA margin of 18.7% reported in H1 26 is not viewed sustainable with higher material costs seen to impact the P&L from Q3 (eNuW). Defending the margins in H2 depends also on the outcome of price and volume negotiations with clients. While falling raw material prices until July were seen as headwind, the second surge of material prices from July onwards provides support for these negotiations. A material part of the remaining € 31m to the full year guidance of operating EBITDA of c. € 100m should be realized in Q3 26 (eNuW). Semperit remains conservative on Q4, awaiting further visibility on raw material price developments and taking into account macro- and geopolitical uncertainty.
Investing in future growth. In the past years, Semperit has taken significant steps to prepare for a cyclical upswing. This includes the four cost savings programs since 2023, but also gradual capacity expansion projects for hoses in Odry and for LSR in Thalheim. At present, some € 50m (eNuW) investments in Odry remain to be realized over the next 4-5 years (eNuW). The exact speed of investments in this plant expansion depends on demand visibly strengthening. In H1 26, Semperit has spent only € 14.5m of its annual € 40-45m CAPEX budget, mainly on maintenance CAPEX. This leaves potential for further investments in Odry in H2 26.
M&A optionality. As flagged in the H1 26 presentation and now confirmed again by the company, Semperit is also looking to add inorganic growth. We expect to see at least one transaction by the end of FY27e. From past deal behavior, i. e. the acquisition of RICO, this could include one sizeable transaction that fits Semperit's elastomer solutions-theme, implies double-digit million revenue contributions and allows the company to leverage further synergies to support its high margins. As M&A is not reflected in our model, this would imply upside to our current estimates.
Current trading. H1 trading came in stronger than expected, driven by positive pricing adjustments in response to raw material price volatility linked to the Iran war, as well as higher volumes on the back of increased demand. As a result, Semperit has already generated € 69m in operating EBITDA, i.e. 69% of its full-year guidance of € 100m. We do not, however, expect H2 to match this strength, as the focus shifts towards defending margins in upcoming price negotiations. Here, Semperit appears well positioned, given its established reputation for quality and reliability in products that are often critical to customers' operations. Beyond this, the company is set to continue stabilizing and strengthening its Belting business, while pursuing further growth opportunities in its other businesses.
Overall, the strong H1 provides a solid foundation for the remainder of the year. To reach guidance, Semperit needs to deliver a further € 31m in operating EBITDA in H2, a material part of which we expect to come through in Q3. The implied Q4 requirement therefore looks conservative to us. Hence, we confirm BUY with a € 22 PT, based on DCF.
ISIN: AT0000785555
