Mayr-Melnhof: With Foresight And Success Through The Crisis

May 18, 2020 3:33 PM ETMayr-Melnhof Karton AG (MNHFF), MNHFY4 Comments
The European View profile picture
The European View
12.97K Followers

Summary

  • Mayr-Melnhof's business model indicates strong stability in times of crisis.
  • The COVID-19 crisis has confirmed this. The company has hardly suffered any damage here.
  • The management is acting very farsightedly and cautiously.
  • Although there will be no dividend increase this year, the management is merely showing caution here. I assume that the next increases will be higher.

Introduction

Mayr-Melnhof Karton AG (OTCPK:MNHFY) (OTC:MNHFF) is a European champion. This is what I call companies that are just as good quality as Anglo-American blue-chip stocks. The COVID-19 crisis has confirmed this impression. The company's business is system relevant, and the company's products are in extremely high demand. The management continues to act with foresight and thinks long term. I have increased my stake in the company from time to time and will continue to do so. In the article, you will find out why Mayr-Melnhof has convinced me again.

Crisis-proof in theory

Just to sum a few things up. Below you will find a short description of the family-owned (57 percent) Austria company, taken from a recent analysis:

Mayr-Melnhof is a manufacturer in the paper and packaging industry and one of the largest manufacturers of recycled paper board and a leading producer of folding cartons. With a production volume of over 60 billion folding cartons each year and with more than 1,500 customers, the company holds a leading position in the global packaging market.

The business is divided into two segments:

  • Karton
  • Packaging.

Mayr-Melnhof Karton is (according to the company) the world's largest producer of coated recycled fiber-based cartonboard with a significant position in virgin fiber-based cartonboard. Furthermore, it is the leading producer of folding cartons in Europe and one of the largest producers worldwide. The distribution of sales and earnings between the two divisions is also relatively uniform.

The company, therefore, produces cardboard and packaging materials. The company prints these materials and sells them to other companies from all kinds of industries (medical, consumer goods, etc.).

(Source: Top customers)

What conclusions can investors draw from this business model?

I believe that first of all, the fundamental development of the world economy towards a globalized market and a globalized

This article was written by

The European View profile picture
12.97K Followers
Runner of the TEV Blog | Lawyer For Competition Law And Antitrust | Private InvestorI am a long-term oriented investor and in my early thirties. I hold a law degree and a doctor in law and love investing and talking about my and others' investments. I regularly write about my research and investments on various investor platforms and on the TEV Blog. Living and working in Europe in an international law firm as a lawyer for antitrust & competition, I may have another view on American companies, especially when it comes to the reputation of a company or possible alternatives here in Europe. Hence, I try to build a diversified portfolio not only with American blue chips but also with smaller and maybe hidden European Champions. Given that, I am very sensitive and close to the political and economic fundamental environment in Europe. My readers benefit from this. When it was foreseeable that Qualcomm would be fined by the European Commission, I calculated the exact amount in advance and was able to inform my readers about it. The same applies to the European Commission's first interim measures against Broadcom, which were the first in two decades. Furthermore, I was the first analyst (to my best knowledge), who predicted without any doubts a dividend cut by Deutsche Telekom. **My articles represent my opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions.**

Disclosure: I am/we are long MNHFF, MNHFY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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