Mytilineos operates three main businesses: metallurgy (aluminium/alumina production), power & gas (power production/supply and gas trading) and large-scale infrastructure EPC. It operates in 29 countries across Europe, the Middle-East and Africa and has 2,700 employees.
Mytilineos leverages its strong competitive positioning to generate robust cash flow, supporting both dividends (c 3% FY18 yield with 13% CAGR) and large growth investments with potentially double-digit returns, which could boost current EBITDA by c 50% (in addition to our current forecasts). One of the largest investment is a new 826MW CCGT plant (24% larger than initially planned) in Greece, announced in July 2019. The plant will have a thermal efficiency of 63%, the highest in Europe, and the total investment is expected to be €300m. Because of the favourable environment for gas plants in Greece, we view the announcement positively.
Although Mytilineos operates in highly competitive international markets, it has leveraged the synergies between the three divisions to build a portfolio of assets that have in common a low-cost, competitive positioning. In particular, the highly efficient gas-fired plants and access to cheap natural gas allow the Power & Gas business to achieve high load factors and higher-than-average margins. Production costs for both alumina/aluminium allow Metallurgy to be profitable and strongly cash flow generative. The EPC business has a track record of stable and relatively high margins.