Scotts Miracle-Gro’s finance chief in the US has re-iterated the company’s plans to sell its European business – but told investors: “We’re not looking to give it away.”
In a Q1 results conference call last week (Tuesday), Randy Coleman (executive VP and CFO) said: “We maintain our bias to exit the European marketplace, and as we said in the past, we've been marketing this business for some time. We still view this as a good business, and we're not looking to give it away. So anything we do must be based on an attractive valuation. I'm cautiously optimistic we will get something done, but I don't want to commit too much, too soon.”
He said he was still hoping for a deal “by spring” but they would continue to run the business if a buyer was not found, despite the adverse effect on the company’s operating margin.
CEO Jim Hagedorn suggested that if the company hit its targets this year, operating margin would increase by more than 250 basis points [2.5%]. “If we exit Europe, that improvement climbs to 350 basis points....I don't think you find a more sort of American company than us.”
During the call, Hagedorn confirmed he was a supporter of Donald Trump. “I voted for him largely because, I expected it to be good for our business, and I hope that turns out to be the case,” he said.
The sell-off is designed to enable the group to focus on its Stateside core business and new ventures, including its fast-growing hydroponics division. It will remove a significant distraction for the US company, but last week’s comments will reassure Miracle-Gro stockists that the company still regards its European business as a valuable commodity.
Conference call transcript source: www.SeekingAlpha.com