MuM’s the (good) word

Last week German reseller Mensch und Maschine (MuM) disclosed preliminary results for 2010 that showed strong growth in revenue and operating profit for the fourth quarter and for the year as a whole. For the year, total sales were up up 19% to €195 million while Q4 sales were €53 million, up 26%. Operating profit for the year more than quadrupled to €6 million. MuM is one of Autodesk’s largest resellers, and one of the largest software resellers in Europe. According to MuM’s calculations, it accounts for roughly 9% of Autodesk’s total sales and 20% to 25% of European sales. MuM continues its transition from a mainly distribution (high volume, low profit) model to a more services-oriented approach (with lower volume but higher profit) that appears to have hit operating break-even at the end of 2010.

The company reported that all three of its business segments saw significant improvement in 2010. The Software segment, which sells MuM-developed solutions such as OPEN MIND (CAM), increased revenue by 18% to € 26 million. This is undoubtedly due in part to a broader distribution network, but also signals a nice recovery in customer buying patterns.

In the Distribution segment, which primarily acts as a Value-Added Distributor for Autodesk, revenue grew 6% to €112 million, with the segment’s operating margin “reach[ing] the pre-crisis level”. Autodesk will report its fourth quarter earnings (ending January 31, 2011) later this month, but had reported that Q3 revenue was up 14% overall and up 15% in EMEA. There’s a disconnect here that deserves more attention, but one explanation could be the relatively slower growth in Germany, MuM’s biggest market, as compared to other parts of Autodesk’s EMEA region where it does not do business.

The VAR segment, in operation since the beginning of 2009 when MuM began buying up resellers in German-speaking countries, was the strongest overall growth driver with a 62% revenue increase to €57 million. This segment is still not quite at break-even for the year but during the “closing quarter, the operating break-even was reached.”

CEO Adi Drotleff commented, “As we predicted, 2010 came in quite well in the middle between the record year 2008 and the crisis year 2009. Because we also achieved sufficiently positive operating cash flows of more than 20 Cents per share, nothing suggests against a resumption of dividend payments, after a break of only one year. We will propose a [€]10 Cents per share payment to the shareholders.”

MuM’s sales rose steadily throughout the year, with Q1 up 8% over the prior year; Q2, up 23%; Q3, up 24% and Q4 up 26%. MuM is taking a cautious approach to 2011, however, targeting growth of about 13% in 2011 for total revenue of € 220 million and 14% in 2012, to € 250 million.

MuM will announce final audited 2010 results on March 21, 2011.