Munich When Nemetschek boss Axel Kaufmann looks out of the window of his office, he sees the hall of the former Munich airport. Riemer Airport has been closed for a long time, but there is still a whiz: Kaufmann’s software company and its share price. Since the beginning of the year, the shares have gained almost half in value – and thus left the TecDax far behind.
The rally cannot be taken for granted, because the products of the company, which was founded in 1966, are difficult to understand: The Bavarians sell construction software. A business that has proven to be largely crisis-proof during the corona pandemic: “The good construction activity and the still inefficient processes in the industry are our biggest growth drivers,” Kaufmann told Handelsblatt.
The company is growing rapidly and is highly profitable. Nevertheless, the manager is now preparing to write the next growth story. He wants to succeed in a rather unusual terrain for the group: with 3D software for film, television and the advertising industry. “We see the opportunity to develop a relevant, independent business,” emphasized Hofmann.
Nemetschek has been active in this area for years with its subsidiary Maxon. Most recently, however, the group merged two US acquisitions with Maxon. The result is an area with now 400 employees – and great ambitions: “I expect growth of 15 to 20 percent per year,” explained Kaufmann. Maxon’s programs are used by creative people to create virtual content for films, TV shows and commercials, as well as for computer games, medical technology and, of course, architecture.
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In the first half of the year, the division achieved sales of 31.2 million euros, a good fifth more than in the previous year. The revenues of the entire group increased in the same period by only 12.5 percent to around 324 million euros. Earnings before interest, taxes, depreciation and amortization (Ebitda) in the “Media and Entertainment” division shot up by two thirds to EUR 10.8 million. That corresponds to an operating margin of almost 35 percent.
New clientele
Nemetschek took over Maxon at the beginning of the millennium to create three-dimensional animations of buildings and thus strengthen the core business. In the meantime, however, broadcasters and studios such as Sky, Fox and ESPN use the software just like advertising agencies. According to its own information, Nemetschek also works with game developers such as Epic Games and even with the iPhone manufacturer Apple.
It’s a completely different clientele than the Munich-based people usually serve. Customers are usually architects and engineers, project developers, construction companies and real estate companies. Nemetschek depicts the trends in the IT industry on the building site: plans are now displayed in 3D, the software runs on-site on tablets, the information is in the data cloud and can therefore be accessed anywhere in the world.
Nemetschek CEO Axel Kaufmann in his office next to the former Munich airport.
Kaufmann asserts that Nemetschek is not getting bogged down with the media industry. “We have successfully diversified without losing focus on the main business.”
Analysts see Nemetschek positively. The software provider exceeded expectations across the board, judged analyst Knut Woller from Baader Bank in the summer after the half-year figures. The key business drivers responsible for the strong results in the second quarter will also be intact in the second half of the year, predicts Berenberg analyst Gal Munda. After the price jump of the past few months, however, the banker does not expect any further increase. Nemetschek is worth a good ten billion euros on the floor. Among the German software manufacturers, only SAP has a higher market capitalization.
Acquisitions, which also created the media sector, have been an important part of Nemetschek’s strategy for years. 15 largely independent brands exist, they are assigned to four areas. Technological synergies are leveraged, but otherwise the specialists act independently.
Construction software manufacturers are generally in demand, which is reflected in the rising prices. The French company Schneider Electric is currently in the process of squeezing out the last free shareholders of the Stuttgart-based RIB Software. When the takeover was announced last year, the electronics company offered 29 euros per share. The remaining shareholders, a good 96 percent of the shares already belong to Schneider, are now to receive 41.72 euros per paper.
It is unlikely that the Munich-based company will one day be taken over; at least as long as the founding Nemetschek family stays with it, which owns a good half of the shares.
More: Gerd Gigerenzer: “Question mark behind the high prices of tech companies”