Wendel profits up 141% on Bureau Veritas float

The French investment firm could have profited even further were it not for hedging costs relating to its stake-building in Saint Gobain, which has dropped in value by nearly 30 percent.

French investment firm Wendel’s profits were up on last year by 141 percent to €879 million ($1.39 billion) for the full year 2007.

The firm’s profits from its portfolio companies stood at €408 million, while its non recurring income was €486 million.

This total could have been substantially larger had the firm not incurred €1.6 billion of costs in relation to its stake-building in building materials group Saint-Gobain. The group has taken out €400 million in protection on this investment, covering 40 percent of its investment in the company until 2012.

The firm has also increased its stake in Saint-Gobain to 21.5 percent from 18 percent, which takes the size of its investment to approximately €5.5 billion, of which €1.2 billion is equity. Wendel reached an agreement with Saint-Gobain’s management this weekend to limit its stake to 21.5 percent and to cap its voting rights at 34 percent until 2011.

Wendel has been building its stake in Saint-Gobain since the Autumn last year, while the company’s share price has declined by nearly 30 percent in the last six months. Saint Gobain’s enterprise value is now €19 billion, valuing Wendel’s stake at approximately €4 billion.

But Wendel also profited from the flotation of safety consultancy Bureau Veritas in October, which generated €1.2 billion for Wendel. The firm remains a 65 percent shareholder in the company having only partially exited its stake upon its initial public offering. Bureau Veritas also provided €188 million in income for Wendel, a 20 percent increase on the previous year.

Profits at the group’s portfolio companies included: electrical fittings manufacturer Legrand earning €129 million; pharmaceutical company Stallergènes providing €16 million; publishing group Editis generating €49 million; Materis providing €46 million; aerospace group Deutsch making €10 million and industrial paints group Stahl making €3 million.

Wendel’s shares were up 5.19 percent today to €79.24 per share, regaining some of the value they have lost in the last year, although they are still down by 55 percent on the previous twelve months’ high of €144.35 per share.