May 23rd, 2024 | 08:30 CEST
E.ON, MGI - Media and Games Invest, Bayer - Through transformation into a golden future
Sometimes, companies are forced to overhaul their business areas if they wish to survive. A transformation is then unavoidable, and hopefully, the companies emerge stronger in the end. However, there is also the possibility that management will recognize the signs of the times early on and adapt their business models. From traditional companies that are starting a second life through digital innovation to young start-ups that are becoming market leaders through strategic realignments, companies are constantly facing challenges. Their path to a golden future is characterized by visionary decisions, agile adjustments and an unwavering will to improve continuously. We have selected three candidates that are currently undergoing a transformation.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
E.ON SE NA O.N. | DE000ENAG999 , MGI MEDIA AND GAMES INVEST SE | SE0018538068 , BAYER AG NA O.N. | DE000BAY0017
Table of contents:
"[...] The mere fact that we have to write off around EUR 5 million shows that mistakes were made. We have to admit this quite openly to ourselves. [...]" André Kolbinger, CEO, Smartbroker Holding AG
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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E.ON - Decent quarterly figures
E.ON has undergone a profound transformation in recent years. In the course of the energy transition and the associated move away from nuclear power and coal, the Company has redefined itself and realigned its strategy. This comprehensive change led to the splitting of the Group into two separate companies. The Company is now increasingly focusing on renewable energies, smart grids and customer solutions. The spun-off Uniper SE has taken over the conventional energy business, including gas and coal-fired power plants, as well as energy trading.
On May 15, the Group announced its financial results for the first quarter, which met expectations. The adjusted EBITDA amounted to EUR 2.7 billion and was thus at the previous year's level. A significant increase in investments of almost 25% compared to the previous year to support further growth was highlighted. The Group's financial basis remains solid thanks to the successful placement of bonds worth EUR 3.3 billion to cover the financial requirements for the current year. The forecast remains optimistic, with a targeted adjusted EBITDA of between EUR 8.8 and 9.0 billion and an expected adjusted Group net profit of EUR 2.8 to 3.0 billion.
Given the increased investment activity and the confirmed financial forecast for 2024, E.ON remains focused on consistently driving forward the energy transition. With the newly created Energy Infrastructure Solutions business area, the Company is also focusing on a transparent presentation of its growth potential. Despite the increased investments and the resulting negative impact on operating cash flow and net debt, E.ON is signaling stability and a positive anticipation of future developments. The share fell after the figures, partly due to the dividend paid, and is currently trading at EUR 12.60.
MGI - From games manufacturer to advertising company
MGI - Media and Games Invest (MGI) has undergone an impressive transformation since its restructuring and acquisition of gamigo in 2012. Originally launched as a gaming company, MGI significantly expanded its business activities in 2018 to include the media sector and entered the advertising business. This strategic realignment has enabled the Company to establish a strong market position through a combination of acquisitions and organic growth. Today, the Company owns an advanced programmatic advertising platform that auctions ads on various digital channels in real-time.
The Company relies on artificial intelligence and detailed data analytics to deliver personalized advertising that is relevant to both advertisers and users. The ads are displayed on websites, mobile devices, and connected TV advertising. This gives MGI a competitive advantage in a dynamic market environment where precise and targeted advertising is becoming increasingly important. Despite challenging economic conditions, such as the impact of the Ukraine conflict and rising interest rates, MGI reported impressive financial figures for the first quarter.
Revenue increased by 20% to EUR 82.5 million, with organic revenue rising by as much as 21%. Adjusted EBITDA grew by 16% to EUR 22 million. This growth is mainly due to the increase in the customer base and efficiency gains through process savings. The Company has an optimistic outlook for 2024 as a whole, with expected revenue of between EUR 350 million and EUR 370 million and adjusted EBITDA of EUR 100 million to EUR 110 million. At the upcoming Annual General Meeting on June 13, the transformation into a fast-growing digital media company is to be finalized by renaming the Company "Verve". Since the announcement of the annual figures, the share price has recovered significantly from its low for the year of EUR 0.77 and is currently trading at EUR 1.716.
Bayer - Undergoing a transformation
Bayer's acquisition of Monsanto in 2018 marked a turning point in the Company's history and made Bayer one of the most prominent players in the agricultural sector. The acquisition significantly expanded Bayer's agricultural business, making it a leading supplier of seeds and crop protection products worldwide. While Bayer strengthened its market position by integrating Monsanto's product portfolio, including genetically modified seeds and glyphosate, it also took on legal risks and image problems. However, the legal disputes ultimately led to difficulties for the Company.
Bayer presented its quarterly figures on May 14, 2024, and triggered mixed feelings among investors. Revenue fell 4.3 % to EUR 13.8 billion compared to the previous year. However, the decline was only 0.6% when adjusted for currency effects and portfolio adjustments. At the same time, EBIT increased by 4.0% to EUR 3.1 billion, while diluted earnings per share fell from EUR 2.22 to EUR 2.04. Despite a continued negative free cash flow, this showed an improvement, falling from minus EUR 4.1 billion in the previous year to minus EUR 2.6 billion. The new drugs Nubeqa and Kerendia are particularly in focus.
Nubeqa, a drug for the treatment of prostate cancer, achieved an impressive sales growth of 64% to EUR 283 million. Kerendia, a drug for chronic kidney disease, recorded sales growth of 66% to EUR 85 million. Analysts see significant growth potential in these drugs, particularly in the expanded use of Kerendia in other indications such as heart failure. This could cushion the upcoming patent losses for blockbuster drugs. The quarterly figures briefly lifted the share back above the EUR 30 mark. The current price per share is EUR 28.00.
Transformations can have positive effects on companies. In the energy sector, E.ON has created a solid basis for future growth through a strategic realignment and considerable investments in renewable energies and intelligent grids. MGI - Media and Games Invest has successfully transformed itself from a game developer into a major player in the digital advertising business and has recently impressed with its financial results. Despite the challenges posed by acquiring Monsanto and the associated legal disputes, Bayer has strengthened its position in the market through innovative medicines and adjustments to its business model. However, the transformation is still ongoing.
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