Mercer Group Acquisition Bears Fruit In Interim Report Results

Christchurch-based Mercer Group Limited (MGL) is reaping the rewards of its most recent acquisition, with the company’s revenue up by 55% and net profit up 176%.

The company released its interim report on February 20, highlighting significant growth and increased revenue as a result of the successful implementation of the Group’s automation-led strategy for the six months to December 31, 2019.

Leading the figures was the company’s revenue, which was $27.9 million and EBITDA, which increased to $1.1m for the period.

At the end of 2018, MGL purchased the chilling and freezing business and capabilities of Milmeq, a food processing automation and engineering company. Since this acquisition, this business has secured more than $35m in orders and generated $10.8m in revenue for MGL in the six months to December 31, under its business H&C Automated Solutions.

H&C Automated Solutions designs and delivers world-leading automated systems to the dairy, cheese, horticulture and meat sectors globally.

Mercer Group CEO Richard Rookes said the introduction of Milmeq had been a driving force in increasing MGL’s sales.

“Bringing the Milmeq capability into H&C has been a great move for us and we’ve been really pleased with the results.

“Reputationally, the brand was among the best in the chilling and freezing industry globally, so it married up well with H&C’s automation capabilities.

“It also provides us with further diversification from a product, industry and geographical perspective.”

The acquisition is part of MGL’s strategy to grow the automation side of its business and given revenue in that area is now up by 76%, MGL was pleased with the outcome, Rookes said.

MGL’s strong performance in the six-month period continued with cash flow from operations at $2.6m inflow, based on the stronger workflows. This resulted in net debt reducing to $2.2m. Net profit increased 176% to $447,000.

MGL’s other business, Mercer Stainless, faced challenges due to decreased dairy sector investment impacting it, with revenues down 26% to $6.6m.

“It has been a difficult time for our Stainless business, as it has been for a lot of businesses working in the dairy sector, but the medium-term outlook is looking steady,” Rookes said.

The Mercer Stainless business was also undertaking work for the broader Group, particularly Milmeq, which was another benefit of the acquisition, he said.

EBITDA was $1.1m for the half year, an increase of 82% on the prior year period. Both the H&C automation business ($1.245m) and Mercer Stainless ($378k) generated positive EBITDA.

Rookes was confident MGL would maintain its momentum through the financial year.

“It’s been a long transition period but we’re in a good position with workflows through the financial year.

“Concurrently, we’re actively looking at opportunities to reduce being exposed to any one sector or market.”

During the interim report period, MGL also appointed a new board chairman, Trevor Burt.

Burt has previously been a member of the executive board of Linde Group, holding positions with the company across China, North America and Europe. He is currently the chairman of New Zealand Lamb Company North America and Rua Bioscience, and is a director of Silver Fern Farms, Market Gardeners and Landpower Group. His previous chairman appointments and directorships include Ngāi Tahu Holdings, Lyttleton Port Company, PGG Wrightson and MainPower.

“Trevor’s contribution has been really valuable and I’m looking forward to working with him on the strategic direction Mercer’s headed in,” Rookes said.

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