Mersen sees 2026 sales growth up to 6% after 2025 decline

Organic sales declined 3.2% to €1,186m in 2025 and net income fell to €14m, dragged by a €45m asset impairment. Mersen declared a €0.90 per-share dividend, returned to positive free cash flow a year ahead of plan, and reported ROCE of 8.4%. For 2026 the company guides organic sales growth of +2% to +6%, an EBITDA margin before non-recurring items of 16% ±50bps, and capex of €90-100m; sales weakness was concentrated in solar and SiC semiconductors while transportation, wind and electrical distribution helped offset declines.

Analysis

Mersen’s recent operational signals point to a bifurcated market: pockets of resilient pricing power in engineered power components versus cyclical weakness in commodity-exposed energy materials. That divergence implies incumbents with differentiated coatings, contact technology, or thermal management IP can protect margins and selectively invest, while pure-play commodity suppliers will episodically compete on volume.

Second-order effects concentrate in the SiC and solar value chains: weak end-market absorption will free up short-term capacity (substrates, epitaxy slots, and contract fab time), compressing ASPs and creating buying windows for vertically integrated customers (inverter makers, EV powertrain OEMs) over the next 6–18 months. At the same time, sustained pricing discipline from specialty suppliers could make small-cap niche players attractive M&A targets for larger electrical groups looking to bolt on proprietary tech at depressed multiples.

Geopolitical and macro energy volatility remains a wild card — oil and regional risk shocks can swiftly reprice raw-material inflation and shipping costs, flipping the relative performance between capital-light software/AI franchises and heavy-electronics manufacturers within weeks. Near-term catalysts to watch are order-book disclosures and large renewable project tender outcomes (0–6 months) and SiC inventory rebalancing signals from Wolfspeed/Wafer suppliers (6–12 months), which will determine whether the current weakness is transient or marks a multi-quarter structural reset.

Key Decisions for Investors

• Long MRN (EPA:MRN) equity, 6–12 month horizon — thesis: pay-for-differentiation in engineered electrical components should re-rate if order flow stabilizes; target +30–50% upside if specialty pricing holds, stop-loss 12% to cap downside from cyclical troughs.
• Pair trade: Long SMCI (SMCI) stock, short TAN (solar ETF), 3–6 month horizon — rationale: secular AI/data-center demand is less exposed to solar/SiC cyclicality; target asymmetric 2:1 upside vs downside (e.g., +40% vs -20%), size to 3–5% portfolio notional and re-weight after next CPI/ISM prints.
• Short Wolfspeed (WOLF) or buy WOLF 6–12 month put spread — thesis: SiC ASPs risk a 15–30% downside as capacity utilization normalizes; structure as a put spread to cap premium (e.g., 40/30% strikes) with expected payoff if inventories weigh pricing over 6–12 months.
• Event hedges: buy 3–6 month OTM puts on large-cap electrical OEMs (e.g., ABB/Siemens equivalents) or MRN to protect against a geo-energy shock — cost acceptable as insurance (target <1% portfolio cost) given high tail risk from regional supply disruptions.