Stock in Focus: Mettler Toledo – an aggressive operator in a lazy industry

Mettler Toledo is a multinational manufacturer of scales and analytical instruments. It is the largest provider of weighing instruments for use in laboratory, industrial, and food retailing applications. These weighing instruments and services have many applications in research and development, quality control, production, logistics and retail to customers around the world.

Please note that Jon Tringale is a Client Portfolio Manager rather than a Portfolio Manager, as mentioned in the video.

Marty Switzer caught up with Jon Tringale to discuss what WCM like about the company.

Mettler is geographically diversified with sales in 2018 derived 31% from Europe, 38% from the Americas and 31% from Asia and other countries. The company has extensive global sales and service organisations with approximately 7,900 (or approximately one-half) of their employees providing sales, marketing and service in 40 countries. The company has a manufacturing presence in Europe, the United States and China.

The investment case

The investment case for Mettler is based on the twin criteria for all holdings in the WCM Quality Global Growth strategy, namely a rising competitive advantage (expanding economic moat) and a corporate culture aligned to this moat trajectory. In addition, the investment case is supported by the strong tailwinds associated with the growth in food safety and product inspection worldwide.

Source: Mettler Toledo

Their primary competitive advantage (economic moat) comes from their large installed base of customers which represents a market share of 25%. Despite this large base their competitive advantage is getting stronger, as Mettler is currently winning close to 60% of new contracts bid for. They are an aggressive operator in a lazy industry.

Culture is the cornerstone to Mettler’s success in what is a relatively mundane industry where best execution is paramount. The average length of tenure of their senior executives (20 years in North America and Europe for the top 80 executives and 18 years for the top 20 in China) is a testament to this culture.

Mettler has been a holding in the WCM Quality Global Growth strategy since March 2018.

Mettler Toledo share price

Mettler Toledo Share price

Source: Bloomberg



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