Superb year sees Montanaro European 18.5% ahead of index

Superb year sees Montanaro European 18.5% ahead of index – Montanaro European Smaller Companies has published its annual results covering the period to 31 March 2019. In a year where the MSCI Europe SmallCap (ex UK) Index (in sterling terms) declined by -6.3%, the net asset value rose by 12.2% to 1,010.8p per share. In total return terms, the NAV per share rose by 13.1%. The share price rose by 11.3% to 890.0p as the discount widened from 11.2% to 12.0%.

The total dividend for the year is 9.0p per share, an increase of 5.9% compared to the previous year.

Extract from the managers’ report

The year to 31 March 2019 again saw some strong performances from our largest contributors. MTU Aero Engines, which develops, manufactures, maintains and repairs aircraft engines, was the biggest single contributor to performance thanks to the company posting record results and occupying a significant weighting in the portfolio throughout the year. Sartorius Stedim, the developer of equipment used to manufacture biologic drugs, again delivered excellent financial results which were duly reflected in the share price.

While both of these companies have been in your portfolio for years now, some of the newer names also did particularly well. MIPS sells a patented insert for recreational helmets which protects against rotational motion. The company was added to your portfolio during the year and subsequently rose by more than 90% as the business delivered extremely strong growth in revenues and profits. Likewise last year we mentioned the addition of Fortnox, which provides cloud-based accounting systems to companies in Sweden. This company also delivered exceptional growth and profitability and was rewarded with a share price that rose by more than 80% in the period.

Our largest detractor was Krones, a developer of bottling solutions for drinks manufacturers. While the company grew its orders, revenues and cash flows during 2018, profitability declined due to higher raw material costs combined with reorganisation and acquisition expenses. The company has raised prices in response to these pressures and we continue to monitor their progress closely.

Melexis, which develops sensors primarily for automotive applications, declined as global trade tensions led to customer inventory corrections. We expect these will prove temporary and believe that the structural growth case is intact, hence we added to our position as the share price weakened in the final quarter of 2018.”

MTE : Superb year sees Montanaro European 18.5% ahead of index


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