Metlen Energy & Metals reports strengthening revenues

Metlen Energy & Metals (MTLN), an Athens-based FTSE 100 constituent, has delivered its first full-year results since becoming a publicly traded entity in the UK. The global industrial and energy group has been traded in Athens since 1995.

The release also came a couple of months after it warned that its cash profits would be a quarter lower than previous expectations. The group’s market valuation has declined by a third since its London debut in August, when it became one of the first companies to use new rules allowing non-sterling shares in FTSE indices. 

The group revealed strengthening full-year revenues fuelled by a “record performance” at its M Renewables division and more than a twofold increase in the top line at its infrastructure and concessions business. But profitability was constrained by project delays at its energy-to-waste plant in Cheshire, cost overruns and losses linked to its renewables and energy transition arm. Earnings duly halved from the prior year, coming in at €314mn (£274mn), ex-minorities. 

Market conditions haven’t been altogether favourable, and may well have deteriorated since the start of the year. Profits from the metals sector were constrained by higher electricity costs, but management is confident that the group’s pivot towards renewable energy, supported by Metlen’s in-house and third-party green energy production will lead to “structurally lower and more stable costs”. One wonders whether this view is held more in hope than in expectation, though. 

Metlen’s share price looks undercooked, at least based on the 37 per cent discount to FactSet’s consensus target rate. The group’s price/earnings to growth ratio of 0.3 times looks anaemic set against its projected earnings growth, but until we gain a better understanding of the multi-faceted group’s operating divisions, we remain on the sidelines. Hold.

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