Værdiansættelse af Foss

Jakob Schnack Christensen & Kim Lundberg Hansen

Student thesis: Diploma thesis

Abstract

The objective purpose of this assignment is to find the Enterprise Value of the Danish company FOSS A/S, which is a global group with over 1200 employees. FOSS develops, builds and sells analytical solutions for routine testing in food and agricultural productions, and is one of the leading competitors in the world. Around 85% of the worldwide milk production is tested by FOSS’ instruments. In order to calculate the enterprise value of the FOSS group we have made an analysis of the company and the market it operates in. This strategic analysis includes the well-known models; VRIN, Porters Generic Strategies, Porters Five Forces and PESTEL. We have found out, that FOSS holds a strong position and operates in a market, which will continue to grow in the coming years. FOSS is expected to grow more than the market as a whole in the first couple of years. We also discovered, that the industry, as a whole, is expected to undergo a minor price pressure in the coming years. In the financial analysis we compare FOSS with two of its rivals; Swedish Perten Instruments AB and Swiss SICK AG. FOSS delivers a strong profit margin that is significant better than their rivals. FOSS’ financial gearing is negative due to almost no financing from external parts. Instead they have a large amount of liquidity. When budgeting we make FOSS grow approximately 6% in the first years due to their own expectations and the historic results. Thereafter the growth rate will go down and stabilize at a level just over 4% in steady state, which is the same as the expected growth rate for the industry as a whole. We expect the profit margin to stay at the same high level, in spite of the expected price pressure, due to continued streamlining and optimization of the organization. The Enterprise Value of the FOSS Group is DKK 9,1 bn. according to our assumptions and calculations. We have made sensitivity analysis, where we change some of the important variables in the valuation calculation to an average level in line with their 2 rivals. This analysis shows, that if we change the profit margin, the asset turnover and the capital structure, then the Enterprise Value for the FOSS group would increase to 12,0 billion DKK. This valuation somewhat confirms our valuation of the FOSS Group on DKK 9,1 bn.

EducationsGraduate Diploma in Financial and Management Accounting, (Diploma Programme) Final Thesis
LanguageDanish
Publication date2014
Number of pages92