Duerr (XTER:DUE, Financial), a German-based global mechanical and plant-engineering firm, was a top contributing stock for the quarter after the company issued second-quarter results that beat market expectations. Much of the earnings improvement was driven by the HOMAG division (woodworking machinery and systems), which generated improved sales and profitability. This led Duerr to increase guidance for sales, earnings and free cash flow for the full year. The company also provided medium-term guidance, suggesting that 8% EBIT margins would be achievable by 2024 at the latest—a significant improvement over the expected margins of 5-6% in 2021. The company also announced the attractive bolt-on acquisition of Hekuma, a German specialist in high-performance automation and a leading supplier of automatic systems for large-scale production of disposable plastic products used in the medical, diagnostics and lab industries. We believe Duerr is successfully delivering on its restructuring goals. The business appears poised for further growth as orders and sales continue to recover from early-pandemic lows.
From David Herro (Trades, Portfolio)'s Oakmark Intl Small Cap (Trades, Portfolio) Fund third-quarter 2021 commentary.
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