Dental implants, pens and hotels
Straumann, Jost-Werke, BIC, BAE Systems, MTU Aero Engines, BASF, Temenos, Oerlikon, Intercontinental Hotels and Ontex
Straumann (STMN) A strong finish to 2024, with North America showing signs of life
Straumann ended 2024 on a high note, delivering solid revenue growth and some encouraging signs of recovery in North America. For most of last year, North America had been a weak spot, lagging behind the rest of the company’s global business. However, in the final quarter, the region started to show some momentum, with growth picking up slightly from the previous quarter.
While it’s not a dramatic turnaround, it does indicate that the worst may be over, and Straumann’s efforts to regain lost ground in the region could start to bear fruit. Meanwhile, Asia-Pacific continued to be the company’s powerhouse, with China leading the charge thanks to strong patient demand. Europe also performed well, with double-digit growth proving that demand remains resilient in key markets.
The core business remains strong, and the company’s ability to protect its margins while continuing to grow organically is reassuring. What’s more interesting is Straumann’s 2025 outlook, which appears to be on the conservative side. Management is guiding for high single-digit revenue growth, but given Straumann’s history of exceeding its own targets, there’s a good chance the company could outperform expectations. They’re also expecting to improve profitability, which is a positive signal considering the ongoing investments in new markets and innovations.
The North American business still has work to do, but the early signs of improvement suggest it won’t be a drag for much longer. Meanwhile, Asia remains a key growth driver, and if China’s demand remains strong, it could further boost results in the coming quarters.
Jost-Werke (JST) Steady 2024
Jost-Werke wrapped up 2024 with a set of results that largely met expectations, showing resilience in a challenging environment. The company’s two main business segments had diverging fortunes—Transport struggled, while Agriculture held up well, helping to offset some of the weakness. The North American market was the biggest drag, with sales dropping sharply as demand softened, while Europe and Asia performed relatively better.
As expected, Jost hasn’t provided guidance yet, choosing to wait until its full-year report in late March to offer a clearer outlook. The most significant factor for the year ahead is the integration of Hyva, a major acquisition that began contributing to Jost’s results in February. This deal has the potential to substantially increase revenue and earnings, but investors are waiting to hear more details on how Jost plans to unlock synergies and manage the integration process. The acquisition could be a game-changer if executed well, but as always, mergers come with challenges, and execution will be key.
The company is in a solid financial position, and the addition of Hyva could transform its business, significantly expanding its global footprint and product offering. However, without clear guidance on how management plans to navigate the shifting market conditions and leverage the acquisition for growth, it might be too early to take a more bullish stance.
BIC (BIC) Strong cash flow keeps the momentum going
BIC wrapped up 2024 with a solid set of results, exceeding expectations on both profitability and cash flow generation. Despite a slight decline in reported revenue, the company demonstrated strong resilience, showing a healthy underlying growth trend.
More importantly, BIC managed to improve its profitability, with a stable operating margin and a solid bottom line, proving that its cost discipline and pricing strategies are working. The company’s cash flow generation was particularly impressive, thanks to effective working capital management and lower-than-expected capital expenditures. This allowed BIC to increase its dividend payout, including a special dividend, and to continue its share buyback program, reinforcing confidence in its financial strength.
Breaking it down by segment, the Lighters business was the standout performer, with a notable increase in margin, reflecting better pricing and cost control. This segment had faced some pressure earlier in the year but ended 2024 on a strong note, showing renewed momentum, particularly in the US. The Shavers business also performed well, maintaining steady growth, while Stationery showed a modest uptick.
These trends indicate that despite a challenging consumer environment, BIC is managing to hold its ground, supported by strong brand equity and a focus on profitable growth. The recent acquisition of Tangle Teezer adds another growth avenue, contributing to the company’s outlook for 2025.
BIC expects continued revenue growth of 4-6% in 2025, with margins remaining stable. Free cash flow is expected to stay above €240m, reinforcing its ability to sustain shareholder returns. With strong fundamentals, a disciplined financial approach, and a solid dividend yield, BIC remains a compelling name in the consumer goods space.
BAE Systems (BA) 2025 guidance raises questions
BAE Systems ended 2024 with another solid performance, hitting expectations on revenue and profitability while delivering an impressive cash flow beat. The company’s backlog grew significantly, reflecting continued strong demand for its defense platforms, and operational execution remained solid across key divisions.
However, while the headline numbers were robust, investors are likely to focus on BAE’s cautious 2025 outlook, which seems more conservative than anticipated. The company’s guidance for revenue, EBIT, and EPS growth is at the lower end of expectations, raising some concerns about potential headwinds, particularly regarding uncertainties in the US defense procurement process.
A key highlight of 2024 was BAE’s exceptional FCF generation, significantly exceeding expectations due to higher customer advances and strong operational execution. However, looking forward, the guidance for 2025 FCF of over £1.1bn is well below market estimates, suggesting that BAE is preparing for a more cautious cash cycle in the near term.
This could be linked to changes in US defense procurement policies, which have introduced some uncertainty regarding future orders and contract structures. The US is a crucial market for BAE, and any slowdown in order flow or budget constraints could impact near-term growth. That said, Europe remains a bright spot, and continued investment in next-generation defense technologies should provide long-term support.
While the long-term fundamentals remain intact, the near-term uncertainties around US defense spending and potential risks to margin expansion could weigh on sentiment. The valuation remains broadly in line with US defense peers, making it seem fairly priced given the risks.
MTU Aero Engines (MTX) Cash flow struggles weigh on outlook
MTU Aero Engines delivered a mixed bag of results for 2024. The Geared Turbofan (GTF) engine program continues to be a drag on cash generation, with additional supply chain volatility adding pressure. While revenue and profit margins showed solid improvement, the key takeaway from these results is that the cash outflows linked to the GTF fleet management program remain a significant headwind. This issue is largely tied to engine recalls and maintenance challenges, which have made it difficult for MTU to fully capture the aftermarket potential from its maintenance, repair, and overhaul (MRO) division. The situation is improving, but progress is slower than some investors had hoped.
MTU is expecting strong organic growth across all key business segments, particularly in OEM spare parts and series engine production. The MRO business is expected to expand, but with GTF engines making up a growing portion of maintenance work, margins may remain under some pressure.
While the top-line growth outlook remains intact, the real concern lies in FCF generation, which is expected to remain in the low triple-digit million range, well below historical norms. This is mainly due to ongoing expenses tied to the GTF fleet management plan, something that will continue to weigh on investor sentiment.
Despite some positive trends, MTU’s valuation is starting to look stretched, especially when compared to peers like Safran, where the discount is much larger than usual. While the company is executing well on its core aviation business, the overhang from the GTF issues and supply chain challenges is keeping the stock from reaching its full potential.
BASF (BAS) Delivering on non-core asset sales with more to come
BASF took another big step forward in its non-core asset monetization strategy, announcing the sale of its Brazilian decorative paints business to Sherwin-Williams for $1.15 billion—a significantly higher price than expected.
The Suvinil business, a market leader in Brazil with a 25% share and €525 million in annual sales, fetched a valuation well above initial estimates, confirming that BASF is executing well on its disposal strategy. This is part of the company’s broader push to divest non-core assets, with more transactions expected in the coming months. The successful sale strengthens BASF’s balance sheet and allows the company to refocus on its core businesses, while also setting a positive precedent for future asset sales.
The next big move for BASF is the planned sale of its c. €4 billion coatings business, which includes surface treatments, refinish coatings, and automotive coatings. The company plans to start the formal disposal process in Q2 2025, with a deal potentially closing by late 2025 or early 2026.
Given the strong valuation achieved for Suvinil, expectations are now higher for this much larger business, which could be worth around €4-5 billion if BASF achieves a similar premium multiple to its recent sale. This would be a major positive for the company, further streamlining its portfolio and unlocking value for shareholders.
Temenos (TEMN) Mixed signals
At results, Temenos Management expressed confidence in the company’s ability to hit its targets, emphasizing a strategic shift towards higher-growth areas like SaaS and cloud solutions. However, the financial impact of these initiatives won’t be fully realized until 2026-2027, largely due to the long sales cycles at major banks (tier 1 and tier 2). The company’s outlook includes double-digit ARR growth, mid-single-digit software licensing growth, and marginal EBIT expansion, but investors were left with more questions than answers after the announcement of the Multifonds divestment.
The sale of Multifonds, a highly profitable business, was meant to free up resources and focus the company on its core strategy, but the valuation of the deal was disappointing. Despite generating $50 million in EBIT with a 37% operating margin, Temenos sold Multifonds for just $400 million, implying a valuation multiple below 10x EV/EBIT—well below industry norms.
This raises concerns about whether the company is getting full value for its assets. While management justified the sale by highlighting that Multifonds’ transition to SaaS was in its early stages and would require heavy investment, the market wasn’t convinced. The proceeds from the deal will fund a share buyback program, with potential for an acquisition, but Temenos currently has no specific M&A targets in sight.
While the strategic pivot towards SaaS is a logical move, it will take time to see meaningful benefits, and the stock’s high valuation might not leave much room for upside.
OC Oerlikon Corp AG (OERL) Decent finish but slow recovery
Oerlikon wrapped up 2024 with results that slightly exceeded expectations, but the outlook for 2025 remains cautious.
The company’s sales and EBITDA were good, mainly due to better-than-expected performance in the Polymer Processing Solutions division. While this business segment wasn’t as weak as feared, Oerlikon still reported a 12% decline in revenue year-over-year, highlighting the challenging environment.
The Surface Solutions division also struggled with softer demand, reinforcing broader concerns about the company’s ability to return to growth quickly. Despite the headwinds, Oerlikon proposed a flat dividend, in line with expectations, which should provide some support to the stock.
For 2025, the company expects either stable or low-single-digit growth, with operational EBITDA margin guidance of ~15.5%. This suggests that any meaningful recovery will be slow and gradual, rather than a sharp rebound.
The ongoing weakness in Surface Solutions and continued softness in Polymer Processing Solutions means that the business environment will remain difficult for at least the first half of the year.
While the company isn’t in trouble, there are no strong catalysts for a significant re-rating in the near term.
Intercontinental Hotels (IHG) Solid 2024, big buyback, and a confident outlook
Intercontinental Hotels delivered a strong full-year 2024 performance. The company posted 7% revenue growth, a 3% increase in RevPAR (Revenue Per Available Room), and healthy net unit growth of 4.3%, showing resilience in a market that has seen some volatility. While the final dividend came in slightly below expectations, the company made up for it with a $900 million share buyback program, reinforcing its commitment to returning capital to shareholders. This move brings the total shareholder return for 2025 to over $1.1 billion.
Beyond the solid numbers, IHG’s outlook remains upbeat. Management expressed confidence in continuing to capitalize on the company’s global footprint, premium positioning, and long-term demand trends.
The acquisition of Ruby Hotels, a premium urban lifestyle brand, adds another growth lever, particularly in Europe, where the group sees untapped potential. IHG reiterated its medium-term EPS growth target of 12-15% per year, backed by expansion in key markets and a strong pipeline of 325,000 rooms. There’s reason to believe IHG can keep surprising on the upside.
IHG remains a high-quality play in the global hospitality space, supported by strong brands, a balanced geographic footprint, and a capital-efficient business model. Its midscale segment exposure makes it resilient, and the buyback further enhances investor returns. The valuation discount compared to Hilton and Marriott might seem unwarranted, especially given IHG’s steady execution and cash flow generation.
Ontex (ONTEX) Beating Expectations, but execution remains key
Ontex delivered a strong Q4 and full-year 2024, with sales exceeding market expectations, particularly in North America. The company also saw sustained momentum in select European categories, showing that its transformation plan is yielding results. Adjusted EBITDA margin was 11.9%, but the real standout was free cash flow, which came in at €48 million. This helped significantly reduce leverage, bringing it down to ~2.5x.
What’s more, 2025 guidance was stronger than anticipated. The company expects like-for-like sales to grow 3-5%, slightly ahead of our expectations, with double-digit growth in North America leading the way. Adjusted EBITDA is forecast to grow 4-7%, reflecting both revenue expansion and ongoing cost efficiencies.
Ontex also plans to keep free cash flow strong while stepping up investments in its transformation. These higher investments could weigh slightly on near-term profitability, but they are necessary to sustain the company’s turnaround and long-term competitiveness.
While the strong cash flow and leverage reduction are clear positives, the company is still in the early stages of its turnaround. Execution risk remains a key factor, particularly as Ontex continues to navigate a highly competitive market.
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