MCH: Lower loss reporting
Further restructuring costs are incurred at the MCH Group. The half-year loss has decreased. MC-squared" is successful in the USA.
The MCH Group generated operating income of CHF 272.1 million in the first half of 2019. This is far below the 2018 figure of 356.6 million. The MCH Group cites the decline in Baselworld, the national trade fairs and the sale of Winkler Livecom as the reasons for this. The American MC2 is successful and generated sales growth in the first half of 2019. As is customary, the second half of 2019 is weaker than the first because of Baselworld and Art Basel, which are held in the first half of the year. But thanks to the biennial trade fair Igeho and the triennial trade fairs Ilmac and Holz, there will be an improvement compared to the second half of 2018.
How further internationally?
Bernd Stadlwieser (pictured), the new CEO of the MCH Group in office since 12 June 2019, said at the press conference on 8 August 2019 that the MCH Group had missed out on internationalisation to some extent. But if the regional art fairs abroad have been divested in recent months, what does internationalisation mean? Will further acquisitions in the "Live Marketing Solutions" segment, such as that of the successful MC2 take place? How will the MCs active in international business2 and Expomobilia supported? What progress has been made with the sale of the exhibition centers in Basel and Zurich? What is the future of Baselworld, and are further declines in the MCH Group's sales to be expected in the coming years, and to what level?
Further restructuring?
The sales of the shares in the Art Fair Düsseldorf at the beginning of 2019 and the India Art Fair announced on September 3, 2019 are interesting. The divestment of the regional art fairs by the MCH Group seems to be an indication that the group is too big to hold comparatively small events. This is also indicated by the passage in the half-year financial statements published on September 3, 2019: "The MCH Group refrains from presenting the segment results, as a detailed insight into the company's costs and earnings structure could result in competitive disadvantages vis-à-vis competitors." The internal structure mentioned in the paragraph as a "transformation process" with a Strategy Committee, an Executive Board and external specialists (besides McKinsey others?) also indicates a confusing structure. It can therefore be assumed that further "restructuring" will be necessary in Switzerland. Since the beginning of 2019, the workforce here has been reduced by 50 people to around 520 employees. The social plan in Switzerland mentioned in the press release is likely to result in further restructuring costs.
Media information: September 19, 2019
Will the MCH Group say goodbye to the Swiss market? If you see that the service business - mainly MC2 and Expomobilia, which focuses on international business - with 104 million Swiss francs in the first half of the year, soon seems to be moving into similar dimensions as the core business "Exhibitions" (151.2 million Swiss francs), the main part of which comes from Baselworld and Art Basel, one must conclude that own exhibitions are almost non-existent in terms of profits.
Since the beginning of 2019, the share price has risen from 18.80 to 22.60 - to 23.80 on the day of CEO Bernd Stadlwieser's media appearance, to 22.70 francs on September 2, 2019, and to 23.70 francs on September 3, the day of the presentation of the half-year results.
A further briefing on the MCH Group's transformation process will follow on 19 September 2019. After that, the future of the MCH Group should become clear.
