Mutares SE & Co. KGaA (MUX) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to our conference call of full year 2021. On our call today, our CFO, Mark Friedrich; and our CIO, Johannes Laumann, will present you the results and the most relevant events of the financial year 2021. After the presentation, we are happy to answer your questions. The presentation shown is available on our website after the call. Before we start, I would like to remind you that this presentation contains forward-looking statements, including projections, which may not develop as we currently expect. I therefore kindly ask you to take note of the precautionary warning about forward-looking statements that is included in the materials on our website. Now let me hand over to Johannes Laumann.

Thank you very much, and a very warm welcome to our earnings call here in April 2022. Roughly 1 year ago, I did ask you in our Annual Shareholder Meeting to fasten your seatbelt because we are moving extremely fast towards growth and profitability. Today, with the publishing of the numbers 2021, I think we can confirm we have delivered what we promised. I will take you on a quick tour through the key highlights and remind you again on our business model, which is the foundation of all the results you'd see, before Mark then will catch up with the financials. Before we go to the key highlights of 2021, I would like to share my key highlight of this year. And my key highlight definitely is the underlying fact of the performance. So the numbers we have delivered, the growth we have delivered, the profitability we have delivered and the promise we kept on the guidance. And the underlying, that's our people, the growth of our people and the delivery of our people, the performance and loyalty of our people. So I would like to use, as an opener of this presentation, also a big thank you to the entire Mutares team, the entire Mutares family, and congrats to a fantastic and brilliant year 2021. Our vision at Mutares was clearly set to be a leading company, a leading firm in the special situations in Europe. And with the numbers presented today of group revenues of EUR 2.5 billion and the holding net income of EUR 50.7 million, which is clearly in the range what we have guided and on the group revenue slightly above, we see ourselves exactly good on track on the numbers we have promised for financial year 2023, which was given in our guidance in 2020. So just to remind you, mid of 2020, we gave the guidance, in 2023, we want to go to EUR 5 billion and EUR 100 million, which is 2% of the target group revenues. And despite the fact of second waves of COVID, despite the fact of a chip crisis in the automotive world especially and despite the fact of a war in Ukraine, we have delivered. And that clearly shows that the business model of Mutares is robust, and we can keep our promises. Details of 2021, and I would separate it in 3 sections. So the first section is transactions. And clearly, if ou see 14 transactions closed, 6 exits closed, 2 transactions signed, we are a very, very strong player when it comes to how active our special situation private equity firms in Europe, and we have here clearly a leading role. We have extended our footprint with 4 opening offices in Europe, which was Madrid, which was Stockholm, which was Vienna, which was Amsterdam, where we clearly already see the first deals coming in, especially in the Nordic, and as we speak, also my Spanish team is negotiating on the final finish line of an SPA, which we'll announce shortly. So you clearly see that the strategy of expanding as the #2 of the highlight really worked out. And then #3, the capital market part, where we have placed a capital increase of EUR 100 million end of last year, where the management and the supervisor both participate with more than EUR 20 million, and we have made an uplisting in the regulated market to increase transparency for shareholders, stakeholders to increase the transparency of the numbers of what we do, how we deliver and how we keep our promises. So there's nothing to hide. It's just relax and enjoy. When we deep dive a little bit into the transactions, which was clearly an outstanding year of the entire Mutares firm, we have delivered exits. And all the exits together kept the promise of a return on invested capital of 7 to 10x. And on average, we were above 10x. Let me point out too here especially on this, STS, which was conducted in the first half of the year where we sold the majority stake of the STS group to Adler Pelzer Group. And then towards the end of the year, where the closing happened in 2022, but the notary and the signing happened in 2021, which was the exit of BEXity with a very fast turnaround where the CEO, Christian Klingler, and his team did an outstandingly good job in making this a wonderful case for Mutares. And on the other side, the acquisition side, the buy side, we have invested more than EUR 50 million in the buy side. We have conducted 14 transactions in a closing. And let me pick out, let's say, 3 where I have -- where I do see the major investments, so we have done the major investments. And the major investments does not necessarily mean a purchase price. It's more what we always said. It's the skin in the game, the skin in the game on the Lapeyre transaction, which -- and I only can repeat myself, which I believe is maybe the deal of my lifetime. So where we injected EUR 20 million in the company as skin in the game, purchase price, it was a euro, but we had to inject skin in the game due to the seller's request. The same happened on LMS, which was bought by Magna, also their skin in the game. And last but not least, La Rochette, which is a cardboard manufacturer, we have to inject the money at closing to have skin in the game, which we bought in France. So the investments in 2021 was a little bit above EUR 50 million in the company. We have exited the companies with our target return of 7 to 10x. So I think we can summarize here on the transaction side in 2021, where I'm very proud of we have delivered. Let me remind you and guide you a little bit through our business model, which we have -- which is the underlying success factor of all of this. So, the business model is grounded on 4 pillars. So one is the European focus, where we opened new offices, where we have a footprint, which is unique in the turnaround market. Then we have the 3 segments of automotive, of engineering technology and goods and services, where we clearly focused on the value chain, where we're clearly focused with our operational forces to make the difference. The company side, we're looking to at the platform investments are in the range of EUR 100 million to EUR 500 million in turnover, this is our sweet spot. This is where we believe we can bring majority value to the company. And then the consideration of turnaround heroes. And then with the help of a very famous football coach who said once, we are not arrogant to say we are the best, but we have a certain belief that there is no better one. And the combination of those 4 pillars, I think, are the drivers of the business model, and it's the foundation of the business model and at the end, the drivers of success. And then you see our development, I think numbers prove that. We started in 2019 with EUR 1 billion. We are now at EUR 2.5 billion. I'll give you an outlook later on in 2022. But clearly, we are on the right focus on the right track to achieve our target in '23 of EUR 5.0 billion and EUR 100 million. However, for me, that's just the beginning. And the slight adjustment of the football coach message was, "I haven't finished yet. And I believe this is just the start of a very, very nice and long journey we have together." And I'm very proud of what we have achieved in 2021, but if you see the targets and if you see what's happening in 2022 when it comes to that to the outlook, you will see it's just the beginning. How do we make decisions and earn money? And this is just a quick reminder. So when Robin Laik, Mark Friedrich and myself, we consider an acquisition, we consider an exit, we consider an investment. We always ask ourselves, do we get back to money 7 to 10x? This is our target, get in return on invested capital of 7 to 10x. And this is the ultimate judgment on do we spend money? Do we spend -- like I showed you before, do we spend this EUR 50 million in the skin in the game in the portfolio? And the answer is, if yes, then we also believe we get the money back 7 to 10x. If the answer is no, we don't invest. So if the answer is yes, we take the acquisition, then we believe the money comes back. And the money comes back through the phases of the companies, but also in different lines and different streams. So in the realignment phase, which is the restructuring phase, the early phase of we own the business, the money comes back to management and consultancy. And this is the strong first return on investment. In the optimization, when the company is breakeven or has stabilized, if stand-alone, then the money comes back to dividends in the portfolio. Those are stable income. And then the last one in the harvesting is, of course, the money comes back when we exit the company and receive exit proceeds. And all of this together is target then of the 1.8% to the 2.2% of group revenues, which is the profit, which is the EUR 50 million this year, which was the EUR 33 million in 2020, which was the EUR 22 million in 2019 and which will be EUR 100 million in 2023. A quick look at the portfolio because that's the ultimate outcome and the companies supporting the business model and living the business model. We hold 25 companies in the portfolio. And we are operating, and you see the 3 sections are not equal exactly when it comes to the number of portfolios. But when it comes to the revenue, we are in a good balance. And why is that good balance? In our view necessary and also needed, it's about the risk diversification. So we want to have the 3 segments because we have, with automotive, an early cycle in the economical trend. We have a late cycle in engineering technology, long-term project business, et cetera. And we have goods and services, which is basically a noncyclic business, if you speak about windows and doors, if you speak about logistics, if you speak about lawn mowers and so on. So the risk diversification is one of the main drivers of the segmentation we have. And let me point out 3 or 4 companies, where I do see in 2022 significant potential for add-on acquisitions, significant potential to follow our buy-and-build strategy when it comes to the growth of Mutares, but also then ultimately, the growth of the individual company. So when we speak about the automotive part, here on LMS and KICO, ISH, those 2 are clearly the ones which we see also in the pipeline that we have good opportunities to buy and build on those. LMS, plastic injection molding, exterior parts, so we see a lot of opportunities there to grow in geographical markets, but also grow into product markets. KICO and ISH, we see a lot of potential to grow geographically, but also to grow from a total setup of the offer and from a customer base perspective. So those 2 cases are very, very strong when it comes to the buy and build in 2022. This is at least what I expect. And then the one in the engineering technology, I want to highlight, and of course, this is just a snapshot and pick out of one because I don't want to spend the entire time here, is Balcke-Dürr. Balcke-Dürr, we sold the [indiscernible] business, we sold the [ coal ] business successfully. And now we're reshaping the organization, we're reshaping the business model, we're reshaping the offering. And we have already done an add-on acquisition from Toshiba, which was closed in 2021, and we continue this part of setting up the new way of Balcke-Dürr. And last but not least, Frigoscandia. It was acquired end of last year, cooling business, cooling logistics business in the Nordics. Here, we clearly see a lot of potential in a market which is starting to consolidate that we can be one of the beneficiaries to grow Frigoscandia, which was owned by the Norwegian Post. And we are very, very confident that we can reshape the company to a very nice and profitable case. So this was the quick snapshot in the portfolio and where do I see buy-and-build strategies in 2022. Mark will go a little bit more in detail on the financial section, and then we hear each other back on the outlook.

Thanks, Johannes. Today, in the financial section, we want to focus on the key financial data of the group and the holding and the relationship between the 2. So let me start with revenues, and we heard already a lot from Johannes that we kept the pace. In 2020, we increased the group revenues by more than 50%. In '21, we did it again. And we see here also looking ahead that we want to keep that kind of pace. In the group, we always publish the EBITDA and the adjusted EBITDA. And here, we see over the last 3 years, the development, which pretty much describes very well our business model. We see a substantial increase in the EBITDA, which pretty much reflects our M&A activity and also the magnitude of our M&A activity. And you see it here, '21 where we published already in 2021 that we did the biggest transaction with Lapeyre but also with LMS, which was quite a big one. And this ended up in an EBITDA of more than EUR 500 billion, more than 3x compared to 2020. On the other hand, the adjusted EBITDA, which is for us a proxy of the operational performance, so leaving aside restructuring, one-off expenses and the M&A activity, and our group financials is declining. And this declining pretty much as a picture for us that we are on the right track. We acquire loss-making entities, and therefore, they contribute negatively in the beginning. And normally, the bigger the entities that we acquired, the higher the contribution, the negative contribution and adjusted EBITDA. And we foresee also that this is going to be increasing in terms of becoming better because of the size but was becoming more negative due to the M&A activities in '20 and '21. The Mutares Holding, the listed entity, pretty much develops along with the group. The revenues, which are comprising our consulting revenues, which are with our own team and something we only provide to our own portfolio, was pretty much in line with the group revenues, which increased also 50%. And also, we see in the Mutares holding revenues, that the increase on a 50% level in the last 3 years. The portfolio income that we introduced in 2021 due -- in the capital increase combines the revenues and the dividends that we derived from our portfolio. We introduced this figure because we strongly believe that we can pretty much control this figure because we offer our services only to our portfolio. And as long as we have a growing portfolio or a big portfolio, we are always able to deliver consulting services to our portfolio companies. And due to the experience from the past, we also kind of observed that we are always able to derive dividend of approximately EUR 50 million from our portfolio. The net income of the group ended up with more than EUR 50 million. And at the very bottom, we now included the relationship again, also for the most recent years here as part of the transparency that you see that the net income of the holding in relation to group revenues is pretty much in the range that we communicated of 1.8% to 2.2% at all time or at years '19, '20 and '21. Looking ahead, I want to start again with the group revenues. The portfolio as of the end of 2021 already contributes approximately EUR 3.5 billion in sales in terms of a 12-month run rate to the year 2022, already excluding the BEXity Group, which we divested in February. And then we had to do some assumptions regarding our M&A activities on the buy side and on the exit side and said, let's take another EUR 500 million on a net basis in terms of exits and acquisitions throughout the year, and that brings us to the at least EUR 4 billion in sales that we want to do in 2021. Based on the EUR 4 billion, we come up again with especially the net income of the holding where we say we want to stick to the range that we communicated of 1.8% to 2.2% and foresee that all the revenues of the holding will increase along with the Mutares Group sales. On the next couple of pages, I will go through the segments of the Mutares Group and will add a couple of comments for some entities and their developments. Starting with the Automotive & Mobility segments. We see in the revenues and especially also in the EBITDA, pretty much the development that we saw for the group. The -- both -- [ those ] KPIs increased due to our M&A activity, especially LMS and ISH. And on the other hand, we also see that the adjusted EBITDA decreased here substantially. And here, just a couple of words because this is an industry, which Johannes mentioned as early cycle industry. And in the segment, we saw quite a good development in the beginning of 2021, pretty much a recovery, especially compared to the first half of 2020, which was the COVID year. But then we faced some headwinds in the supply chain, especially semiconductor availability was heavily affecting the portfolio companies. And in the end, especially in the last quarter, also the increase in raw material prices and electricity. Nevertheless, despite these challenges, we strongly believe at all times that we want to invest in this segment because we strongly believe that the environment -- the current environment that we still see in the segment provides for a lot of opportunities. And that we, with our team, were able to gain some reasonable experience how to handle the risk and the challenges that we had in the year 2021 and also in 2020 in this segment. Coming to the next segment, the Engineering & Technology, where we also saw a substantial increase in revenues due to the M&A activities, mostly of the full year effects from the acquisition of Lacroix and also for the full year effect of Royal de Boer but also with the new acquisitions that we did and here especially the La Rochette Group, the Clecim and also the Royal De Boer. The EBITDA was influenced by again the acquisitions. And here, we also see the setback in the adjusted EBITDA. Despite the very pleasant development, especially of the Nordic part, Donges Group, but also the Lacroix + Kress Group. On the other hand, we had some headwinds in the Balcke-Dürr Group and in Gemini and ADComms group, where we really struggled with the market and with the headwinds from the market, so we're not able to fulfill our growth target here. And we adjusted here our approach and look ahead in 2021 to a more [ pleasant ] results for us. I want to close the segment here with some words regarding especially Royal de Boer, Japy and Clecim and also the La Rochette. We were able here to implement a restructuring plan in a decent time also for the Mutares criteria, and we're able to already execute here. And looking ahead here in 2021, we strongly believe that we have here the Engineering & Technology segment, a very promising distribution along the life cycle. Coming to the last segment, the Goods & Services, where we see again the increase in revenues more than doubled compared to 2020, where we had most of the transactions. So 7 acquisitions here in 2021. And the EBITDA here, you see the EUR 450 million was mainly influenced by the acquisition of Lapeyre, which is, for us, a transaction which we have never done before and where we see that we have, from an M&A perspective, done a great job because somebody was willing to hand over net assets of more than EUR 400 million that you see here. On the other hand here, this is the only segment where we were able to improve the adjusted EBITDA compared to 2020 despite the number of acquisitions that we did. And let me take just a couple of few that are influencing -- mainly influencing the adjusted EBITDA compared to 2020. First one is the BEXity, which was really a nice turnaround within a reasonable time and was contributing very positively to the adjusted EBITDA in 2021. Same goes pretty much for the Terranor Group, which also positively contributed to the adjusted EBITDA and was executing a very fast turnaround. On the other hand, also a company like SABO was contributing much less negative compared to 2021, and therefore, was able to contribute to the improvement that you see. And last but not least, again, Lapeyre. Lapeyre had some really support from the market after the acquisition with strong sales and also to a surprise for us was less negative than we anticipated in the transaction. Therefore, the figure was way better than we actually expected. And the restructuring plan is well on track that we see in Lapeyre, and we are looking forward to the contributions in 2022. I want to finish my part with the life cycle. You know that our business model is based on acquiring loss-making companies. We invest with our team to turn around the company and want to divest within 3 to 5 years once the companies are profitable. And this chart pretty much shows everything that we have done in the last 2 years. We have today 11 companies in the realignment phase. And this pretty much reflects our strong activity in 2021. And here on the very right side, we included now the financial year 2020 figures, which do not include the same companies. But the figures that we showed in 2020 show that we have done a great job in M&A because we were able to acquire a lot of companies. So we're pretty much 10x increased the sales level and 10x increased the asset -- the net assets that we have in the group now. And the adjusted EBITDA was decreasing only slightly. And especially if we put the relationship here in the picture, you see that actually the adjusted EBITDA of only EUR 45 million negative in relation to the [indiscernible] is way better than in 2020. Going one step up to the optimization phase, we have here 9 companies in the group, which mostly were acquired in 2020. And here also, we see that we were able to increase pretty much all figures that you see on the right side. And where we strongly believe that we have done a great job throughout 2021, and we will see in 2022 when we see -- we want to see each at the back for the Q1 that we will put some companies to the final stage, the harvesting stage. So we have included here 3 companies only with 1 of them, BEXity, that we signed, the exit that we signed in December and closed in February. So only 2 companies left. I personally believe that we -- especially with the Donges Group and the opportunities that we have, that there's one company in there that provides a lot of fantasy and also opportunity for 2022. And therefore, you see here the comparison with 2020 that we have a slight decrease here in terms of sales but an increase in profitability. And we had in this segment also the STS Group, so pretty much all companies that we divested also in 2021. Looking ahead also with this, we strongly believe that we want to keep on filling our portfolio and moving up the life cycle for the portfolio companies along -- along the way, we actually want to proceed pretty much in the curve upwards and with a target to divest within 3 to 5 years. And with that, hand over back to Johannes.

Thank you, Mark. I would like to give you a quick outlook on 2 things, first of all, on the transactions and then on the results of 2022. When we look at the transactions in buy side and sell side, we have at the moment the biggest pipeline ever. And basically, my M&A team works under ultimate pressure at the moment in each of the countries to transact and handle this pipeline despite any COVID infections, et cetera. So a huge pressure here because our pipeline is the biggest one we ever had, and we are really, really hot to transact. I used to say to the team that it is almost a [indiscernible] but under heat and pressure, you will make diamonds. And I think the pipeline we have at the moment, there are a lot of times when we just have to crack them. EUR 1.7 billion is in the hotlist, and hotlist is something where we are under SPA negotiations, under contract negotiations, and I'm very confident that this week, we will transact and maybe not only once. And then as always, we want to have one transaction per month on average, so we want to transact 12 times. We have already acquired EUR 0.7 billion, EUR 700 million roughly in 2022. Those include 3 transactions, where 2 were announced, 1 is not announced yet, but will follow in Q2, the announcement of the process. But EUR 700 million are already in the pocket for 2022 when it comes to the turnover of 3 transactions. And I'm very confident that in 2022, we will achieve the 12 transactions once a month. I would be extremely disappointed if that target is missed. And then on the exit side, we currently work on 4 exits in different stages. One, more towards the end. So I'm very sure we will transact in Q2 on the exit side at least once. And then other exits, which have just started, but we are very, very confident that we get very good signals from the market that we have also here a good exit pipeline to achieve lucrative exits in 2022 in order to be, again, one of the most active private equity investment, special situations in Europe and continue to write our story and at the end, deliver what we promise. And last but not least, the outlook on the financials. I know that sometimes I'm loud, sometimes maybe a bit too loud. But look at this slide, I think numbers and actions speak louder than words. The guidance, 2022, we want to have a minimum of EUR 4 billion turnover company in the range, the net holding income, the net holding profit, which is distributable income, EUR 72 million to EUR 88 million. We have said we want to go to Helsinki. The office has opened already now. We have said we want to go to Eastern Europe, let's build a plan. And finally, we consider to pilot our business model more towards the end of the year in America. So this is the promise for 2022. And before I want to hand back to the moderator, I would renew my recommendation of remaining your seatbelts fastened, because the numbers you see and the pipeline you see and the plans we have and the promises we give you are there, it will go very, very fast. So keep the seatbelts fastened. Our promise, we will also deliver in 2022. Thank you for participating today. Thank you again for the entire Mutares team for a brilliant 2021. We, as a Board, are proud to be part and lead this journey with all of you guys, and '22 will be even better, and we will deliver again. Thank you very much to all of you, and I would like to hand back to the moderator now for potential questions and answers.

[Operator Instructions] We have a first question. It's from [ Mr. Thomas ] of Jefferies.

Congratulations on the results. I just had a question about the pipeline that you're alluding to. Clearly, it sounds very attractive. And you're saying it's a record number of opportunities there. Could you maybe just give us a flavor for what kinds of opportunities those might be? Obviously, I appreciate you can't go into too much detail. Have some of those come about, perhaps because of the more difficult market conditions in 1Q? Just anything more you can perhaps give us about that and how many you might hope to be able to execute on would be very helpful.

Sure. I think the -- when you look at the pipeline and let's say, when you look especially at the hotlist project where we were already in negotiations or let's say, we have taken the last curve and we are just is on the finish line there, the majority of this transaction comes in the first 2 segments. We have Automotive and Engineering & Technology, not too much on the goods and service side. So those 2 segments are predominantly the ones where we see the larger part of the pipeline. Why is that? I think in COVID -- and that's my personal interpretation, in COVID, corporates have considered back to core, considered back to what is our strength. And we clearly see the divestment of the noncore businesses on large corporates in those 2 segments. That's number one. And I think the situation of COVID kind of not solved, chip crisis takes potentially longer than expected, plus now the impact of the war in Ukraine has -- have put another pressure of speed into transactions. So what we see is from that the time line of the transaction gets shortened. And while in the past transaction, we're dragging for a certain amount of time. So the corporates are now pushing to have it as short as possible, as condensed as possible and as quick as possible. And that's why I think we currently have a significant workload on the M&A. And I'm super happy that the entire team works together here in one direction. And we'll fight with each other for all the deals, and we will win all these deals, the one we want. But the pipeline is amazing, and we will get our share of this, for sure.

That's very helpful. Can I perhaps just ask one follow-up, which is, is the complexity of some of the deals that you're most confident in perhaps in executing on similar to what you've kind of seen in the past? Or is there perhaps a higher degree of complexity with some of these assets?

The honest personal answer is the complexity comes with a seller. So you can have a complex seller for -- and you can have easy sellers. I think the complexity of a turnaround, of course, the larger the size, of course, the more locations are included, and of course, the more under pressure the business is. That drives the complexity. But that's our day-to-day business. That's our butter and bread. That's our USP, where we are good. And when it comes to transactions, you have straightforward transactions with large corporates. You have more difficult transactions where also there is a little bit of political influence. You can't say that, let's say, in general. So yes, we do have, in this pipeline, transactions where there is, for example, political influence, which is tough and complex and everybody wants to have a say; and then you have transactions in there with large, large corporates where they have made a decision, they have made up their mind. They have a clear idea how much they are willing to inject in the company and that's the straightforward transactions we are working on. So you have both types actually, but it pretty much depends on the seller and not on the environment of today.

The next question is by Alina Köhler of HAIB.

I have 2 questions. Could you share your assumptions on excess that you have included in the holding net income? So what's the exit gains that you have factored in there? And then the second question is, do you think that the war will impact your ability to go through the exits that you have mentioned earlier on?

Let me start with the second question of the war and then the exit part, I will hand to Mark. I think it's very difficult to judge at the moment the impact of the war going into the future. What we see as Mutares is that we have very little struggle on the top line as we are -- none of our portfolio companies is heavily exposed into Russia or Ukraine. So we don't have an impact on the top line of our portfolio. However, what we see is that the ultimate pressure on raw material prices raises here. And this is something we have to tackle together with all our stakeholders, if it's the customers, if it's the suppliers, if it's the employees. But there we see a pressure on the raw material prices, not so much on the top line here. When it comes to the impact on 2022 and the exits, we don't see an impact there in the sense that we are not confident in the numbers we promised or in the exits we want to deliver. I think it's clear that the forecast we gave and the promise we give takes into account that potential downside of the war also in 2022. And well, I think you can clearly see that we believe in what we have said. I've just invested today myself into the share again. So we are confident that the war will not impact our promises for 2022 and the war will not impact our exit. However, on a personal note, yes, I hope, wish, and pray every day this disaster ends sooner the better.

And for the question regarding the exit proceeds. There is some interaction between the exit proceeds and the dividend. So if we are able to divest the company, we obviously are not able to generate some dividends. So that's why we are always a bit cautious regarding the guidance, regarding exit proceeds. But it's just a rough figure. It's approximately 50% that we have included in terms of the net holding income that we want to achieve for 2022 that should be derived from exits.

Next question is by Zafer Rüzgar of Pareto Securities.

I have 2 questions. The first one is on the acquisition pipeline and the related revenue size of EUR 11 billion, this is significantly higher compared to the EUR 9 billion, which you had mentioned at your Capital Markets Day in September last year. The deviation of EUR 2 billion, is this mainly due to the size of the targets? Or do you now have just a higher number of potential targets? And then also related to the potential contribution of Mutares to these targets. Do you have now a higher capital requirement when acquiring these targets compared to the past? And probably, do you have a number for us what will be your target to invest as skin in the game in these companies, that would be my first question.

Yes. Indeed, the pipeline has raised. And when we consider it, it's 2 factors mainly. Of course, there are certain deviations of phasing of transactions. But 2 main things we see in the pipeline is number one, a significant increase in the auto potential, the auto opportunity. So more automotive suppliers, first and second tier are divesting companies. So the part of auto has increased compared to, let's say, 6 months ago. And secondly, our entire Benelux market has developed in the last 6 months. We just opened Amsterdam towards the end of last year. We have started September, October-ish and where we have no projects when we met on the Capital Markets Day. And now in the last 6 months, Benelux has developed. And actually more than EUR 0.5 billion of this 11 -- EUR 700 million, EUR 800 million of this EUR 11 billion comes purely from Benelux, which is a market we have not encountered in September, October. So those were the 2 main drivers for this. When I look at the pipeline, yes, there are significant deals. And yes, we already know for some of them that there is skin in the game expected, the matter of fact that we will plan to outgrow this year. And this year, we have invested EUR 50 million. My best guesstimate is that the injection into companies when it comes to skin in the game will be somewhere between the EUR 50 million and EUR 100 million for this year.

Okay. And the second one will be a more follow-up on to a previous question regarding your net income target and to get a better feeling of the breakdown of your net income on holding level. I mean there is obviously a recurring more predictable part in this earnings KPI in comparison to your income on consolidated level. Can you tell us, in addition to the 50% of potential exit gains, how much of the targeted range of EUR 72 million to EUR 88 million is already booked through consulting fees, et cetera? And then the second part here, your 2021 net income, I guess, an internal earnings component. Is your target for 2020 entirely related to external exits? Or are there also some potential internal component?

Regarding your first question, the contribution of the consulting to the target. When you look at the figures that we had for '19 until '21, you pretty much see that the holding revenues at approximately 2% of group revenues. The higher the group revenues, the higher the complexity and the higher the number. So therefore, this goes a bit along. And we saw it in the last year. For 2022, we assume that the consulting revenues of the holding will increase to something around EUR 75 million. So that's, again, a 50% increase that you can contribute also to the net result. Second part of the question is no, that we included only in the planning, external exit gains.

The next question is by Stefan Augustin, Warburg Research.

And also, I mean it's probably coming back to a couple of things here. So I understand that the pipeline increases from the additional number of offices. Could you share with us? I mean, you probably have expanded a lot in Europe right now. So this is a bit of a kind of a consolidation again, if you laid out that we have the first step probably to the U.S. But how much more consultants do you actually plan to put in the offices around 2022? And can we also have the thinking that this will actually finally relate to a further increase in the deal pipeline because, let's say, more people get more deals.

So when we expand into a market, and Benelux was the last example, and Vienna is also a very, very good example where we try to tackle the Eastern European part a little bit as well with Katerina in Vienna and Jurjen in Amsterdam. I believe our world, our restructuring world, our turnaround world, in order to get deals, it's -- in 80%, it's a local transaction. So you need to be local. That means if you're not local, you don't get a deal. So if you're a local, you see the deals. As I said, EUR 700 million or EUR 800 million of the pipeline is Benelux only because we have now 2 people sitting there, talking to the banks, talking to advisers, talking to corporates and coming down after the pipeline. So to answer the question, yes, if you're local and if you put people in a country, automatically, your pipeline will increase because you see more and more transactions. This we have seen in Spain, where we have made one deal. And hopefully, this week will be the second one. When -- we have seen that in Stockholm. We have seen that in Vienna. We have seen that in Amsterdam. So if it's clear, yes. If you expand your footprint, you get more deals visible and then ultimately, you also transact more. That's number one. Number two, the more you transact, the more you have, the more you also need local people in order to do the turnaround, going operationally, solve it together with the management, which ultimately leads to higher consulting income, which leads to a higher profitability on holding level. So the growth part of opening up countries and the growth part of putting M&A and transactions there clearly has the ultimate effect of a positive net profit impact on the holding.

And what will be the planned number of consultants in 2022 there?

We have a plan this year to expand by around 40 to 50 people, the consulting practice.

All right. And then coming back a little bit on Russia. You said that your exposure into, let's say, certain countries is comparatively low. Still the question, is there -- let's say, somewhere the threat of an asset write-down that could have an impact? Or is it all negligible or put into insurance?

We don't hold any assets in Russia. It was only a customer relationship, and the major 1 is the Balcke-Dürr where there's an order from a joint venture where Rosneft is included, but we don't hold in any of our portfolios, assets in Russia. So there's no write-down. We have 1 factory in the Ukraine in the Western part of Ukraine for Plati. Our people are safe there at the moment. We are in continuous contact with them. We try to do our best together with our customers to keep production up and running and serve our customers there. And there is also -- it goes the opposite side because they're -- it's supportive and we're planning to increase even the capacity in the Western part of the Ukraine at the moment, so there is also no risk of a write-off on assets on this one. And besides the factory of Plati in Ukraine, there is no -- there are no assets of any portfolio in Russia or Ukraine.

Right. Thanks very much for this clarification. Then a little bit coming on the possible exits. I mean I think you were at least hinting a little bit the idea to use the capital market maybe in 2022. So now the situation is a bit more difficult, still you plan for the exits. So is there a thinking to say if this one channel does not work, I will still make the exit, but probably in a different channel.

I mean we are open and do whatever is best. However, I still hold to my plan and believe that what I have promised, I will also deliver. Can't say more on this. If the plan is still alive and valid, then we will execute.

[Operator Instructions] And no further questions, and so I hand back to you.

Yes. Thank you very much for your questions. And we hope we could answer them to your satisfaction. Again, thanks a lot for being with us in 2021. I think we delivered brilliantly. And the outlook despite the global condition, it's very promising and very good. And you have our word that we will do the utmost with our team with our entire Mutares family to deliver what we have showed you today. Thank you very much. We see us back on the Q1 and have a safe day. Have a good day. And if we don't hear and see each other, Happy Easter. Thank you very much. Bye-bye.

Thank you very much for participating in this call today. We wish you a great rest of the day. Until next time. Goodbye.