Company description: World leader in drum closures
Ringmetall is a leading manufacturer of specialist packaging solutions, with sales of around €102m in FY17, split about 34% in Germany and 25% in the US, with the balance split across Europe and Asia. The company has two divisions:
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Industrial packaging (86% of 2017 sales). Ringmetall manufactures industrial drum closure systems, lids and gaskets, locking rings, handles and accessories. The company’s most important end-markets are within the food, chemicals/petrochemicals and pharmaceutical sectors, as well as speciality industrial equipment and agriculture. Ringmetall’s products also have applications in other sensitive industries, such as nuclear. It is the global market leader in secure drum closure systems, manufacturing over 2,000 different types of clamping rings, and has been active in the business for 60 years. In 2015, the company entered the US market through the acquisition of market-leading drum closure manufacturer Self Industries. In 2017, it announced two further deals extending its growth strategy: in June 2017, it announced the acquisition of the assets of Hong Renim (Hong Ren) in China, which completed in February 2018. On 31 July 2017, it acquired Latza, based in Attendorn, Germany, for an undisclosed price.
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Industrial handling (14% of 2017 sales). Ringmetall manufactures forklift components and specialist components for trucks and agricultural vehicles. These are niche components, such as restraint systems, speciality brake and clutch pedals, lifting mast components, as well as complex welded assemblies, trailer coupling systems and hydraulic brackets.
Founded in 1997 under the name of HPI and listed in 2007, the company was rebranded to Ringmetall in 2015, an industrial manufacturing company. It operates as a holding company for its 19 subsidiaries, which operate largely autonomously from 19 manufacturing locations around the globe. The centre provides finance, investor relations, strategic and corporate development functions for the group’s operations. Ringmetall is the global market leader in drum closure systems with market shares of about 70% globally and 80% in Europe and the US. It has longstanding relationships with the three leading global drum manufacturers, Greif, Mauser and Schuetz, with a global capability to provide tailored solutions, which provides a significant barrier to entry for new entrants and existing competitors. It also has other blue-chip clients, notably Linde, BASF, Novartis and John Deere. Industries handling hazardous products with high safety requirements (eg chemicals, petrochemical, pharmaceuticals, food, etc) make up most of the customer base for Industrial Packaging, while the Industrial Handling division primarily service the logistics and agricultural equipment markets.
During 2017, the company has further developed its strategy and has stated ambitious financial targets for 2021. It expects to achieve sales in excess of €200m, almost double the FY17 level, generating an EBITDA margin of at least 15% (FY17 11.8%). The growth is expected to be achieved through organic growth at a rate of 4–5% per annum with the balance coming through targeted M&A, primarily for the Industrial Packaging division. However, following restructuring in FY17, acquisitions for the Industrial Handling operation will also now be considered. If we assume the lower end of the organic growth range then acquisitions with sales of over €75m will be required to achieve the revenue target.
In FY17, the company raised €9.5m through the issue of 2.52m new shares at €3.80 per share to help facilitate the growth strategy this followed to significant deals during the year:
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The acquisition of Latza for an undisclosed price was announced on 31 July 2017. Based in Attendorn, Germany, Latza is a manufacturer of specialist clamping rings of different dimensions, material widths and surface coatings including the corresponding sealing plugs, with a specialisation in tinplate applications. It also brings with it innovative spring clamping ring technologies that Ringmetall will be able to offer across its Industrials Handling division. Management indicates that Latza will add €4–5m to group sales in a full year, with similar EBITDA margins to Ringmetall at the group level.
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In June 2017, it announced the proposed acquisition of Hong Renim (Hong Ren), a Changzhou, China-based producer of tension rings and barrel closure systems in an asset-based deal. The selling family retain a 20% stake with the production facilities integrated into Ringmetall’s existing operation in Changzhou. The purchase of a small profitable competitor with sales of around €1.2m extends customer relationships and further raises awareness of quality and safety standards in dangerous goods packaging. It also increases export capabilities into the Asian market. The deal completed in February 2018.
The group remains in discussions with several potential takeover prospects and expects to conclude at least one acquisition in FY18.
As part of its growth strategy, management has also stated that it intends to move to the Regulated Market (General Standard) of the Deutsche Borse in July 2018.
