MPC Münchmeyer Petersen Capital AG (MPCK) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the MPC Capital AG following the publication of the first half year figures of 2025. I am delighted to welcome the CEO, Constantin Baack; and CFO, Dr. Philipp Lauenstein, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will have the possibility to place your questions directly to the management. And with this, I hand over to MPC's Head of Investor Relations and Corporate Communications, Stefan Zenker. Stefan, the stage is yours.

Yes. Thank you, Judith. And ladies and gentlemen, good morning. This is Stefan Zenker speaking, Head of IR at MPC Capital. A very warm welcome also from my side to the presentation of our half year interim financial report 2025. And as always, please be reminded that certain information and statements shared in this presentation and the related documents may constitute forward-looking statements under the securities laws. Therefore, please read the disclaimer attached to this presentation carefully. With me today are our CEO, Constantin Baack; and our CFO, Dr. Philipp Lauenstein, and both will provide you with an update on our operating activities in the first half of the year as well as our key financials. After that, we are happy to take your questions. I may now hand over to Constantin Baack. The floor is yours.

Yes. Thank you, Stefan. Thank you, Judith. Good morning, everyone, and thank you for joining us today. This is Constantin Baack speaking. I would like you to warmly welcome you to our earnings call in connection with today's release of our Q2 2025 figures. Before we begin today's presentation, I would like to take a moment to reflect on the second quarter and the first half of 2025. We continue to operate in a challenging global environment shaped by persistent geopolitical tension and ongoing economic uncertainty. These external factors have had a significant influence on global markets and supply chains. Despite this backdrop, we are very pleased to report strong results for both the second quarter and the first half of the year. These outcomes underscore MPC Capital's resilience and our ability to navigate complex macroeconomic and geopolitical dynamics effectively. Our strategic agility has enabled us to capitalize on market volatility, unlocking value through new initiatives, targeted acquisitions and a transaction volume of around EUR 1 billion during the 6 months this year. The continued expansion of our maritime service business and co-investment portfolio has further reinforced our foundation, contributing to stable recurring management fees and sustainable investment income. Notably, during the first half of 2025, our operating costs were fully covered by management fees. This milestone highlights the strength of our business model and the soundness of our strategic direction. And with that said, let me kick off by outlining the agenda for today's earnings call. If we can please move to the next slide. I will begin with a company update, highlighting the key financial and operating milestones for the past quarter and the year-to-date. Philipp will then walk us through a more detailed analysis of the financial highlights. And to close the presentation, I will share our outlook for the rest of the year and beyond, including the strategic actions we are taking to build on our current momentum before we then open the floor for a Q&A session. Moving on to the next slide. Today, one more, please. So I would like to start the company update by applying a somewhat wider lens as it is also important to reflect the world around us and synchronize it with MPC Capital. What does the current environment geopolitically and macroeconomically look like? And what does it mean for us at MPC Capital and our activities. Looking at the broad environment we're operating in, we see that there's global instability that continues to shape the economic and business landscape. Geopolitical tensions, regional disruptions and policy unpredictability are contributing to a level of uncertainty that is challenging long-term planning and certainly also market confidence. We further see that capital market volatility has intensified in response. Beyond inflation and interest rate dynamics, factors such as trade disputes, tariffs and geopolitical shifts are driving fluctuations in investor sentiment and also asset valuations. This calls for increased agility and resilience in financial strategy. We also see that the green agenda once a clear global priority is facing growing challenges. Economic pressures and shifting political focus have slowed progress in areas like energy transition and climate policy. While long-term commitments remain, short-term execution is becoming more and more fragmented even across regions. Despite these headwinds, we remain focused on navigating this environment with discipline, adaptability and also long-term perspective. So what does this mean for us at MPC Capital? Despite the obvious challenges, we continue to be well positioned, and we can look ahead with confidence. Our strong visibility into revenues and earnings on the one hand, enables us to remain resilient and largely decoupled from short and midterm macroeconomic challenges. This gives us a solid foundation even when external conditions are uncertain. We recognize that market volatility and dislocations present risks, but they also open up new opportunities for business development, and we believe we can turn these challenges into growth prospects. The energy transition is still very much alive even as the U.S. steps back from part of the green agenda globally. Our firm view is this shift hasn't stopped and it will not. Europe, especially Germany, is driving forward with energy independence. This is fueling a broader industrial transformation where digital technologies and green innovation are reshaping traditional sectors. To support this change, there's a growing need for investment in real assets, creating strong opportunities in today's market. And furthermore, we continue to prioritize the expansion of our recurring management fee base, which we have done successfully over the past years. This focus helps us build more stable and predictable revenue streams for the future. And as I said earlier, currently, our management fees cover our operating costs, which is a good starting point. Maintaining a robust balance sheet and practicing proactive risk management are key priorities. These efforts ensure we are well prepared to navigate risks and seize opportunities as they arise. Moving on to the next slide, please. And as also mentioned earlier, looking at Q2 2025, we are very pleased to report a strong operational and financial performance on the back of continuous growth across the business, which is also reflected when looking at our main KPIs on the right-hand side of the slide. And let me summarize the key highlights of the first half of 2025. We continue to expand our asset base, achieving 10% year-on-year growth in assets under management. Our pipeline remains strong, and we have around USD 800 million in contracted AUM, which will flow into our assets under management over the next years, setting us up for further growth. Our maritime service platform is also expanding with recurring management fees up 5% year-on-year, and this steady growth in recurring income streams strengthens our business foundation. Co-investment income is down 40% year-on-year for the first half of 2025, and this is mainly due to strong exit-related returns that we were able to realize last year. Despite this, our co-investment activities continue to generate high-quality income. Overall, our business model remains resilient. We have seen limited impact from geopolitical challenges and MPC Capital is fully on track to meet our 2025 guidance. Philipp will talk to that in a bit more detail later on. At the same time, we continue to operate on a very healthy balance sheet with an equity ratio of 84%. Let me now provide some additional insights on the next slide as we continue to execute our refined strategy in 2025. Maritime service expansion is the first headline, and that is that we have, over the past years, been building a comprehensive 360 degrees maritime service business that is encompassing not only technical management, also commercial management and a wide range of ancillary services around the ships. Our growth has been both organic and inorganic. Today, our maritime services team compromises approximately 200 employees, supporting hundreds of vessels across more than 50 industrial clients. Alongside our investment management activities, maritime services have become a cornerstone of our operations. This is a stable, resilient business with a well-diversified client base, and we are committed to expand this further. What have we achieved? Zeaborn integration is the first topic that I would like to talk to in the first half of 2025. We have successfully completed the integration of Zeaborn and the target structure is now fully operational, and that is reflected in both the revenues that we generate and also the cost side, and we have already onboarded new third-party clients and vessels in this year. We have taken out a strategic investment in BestShip. Also in the first half of 2025, we have expanded our service portfolio by acquiring 50% stake in BestShip, which is a performance management firm operating a fully digitized IT platform that enhances the energy efficiency of commercial vessels and currently serves over 450 ships. We believe this is a very important additional step forward, creating further services and fee streams in terms of ancillary services provided to ships. We also saw a strong momentum in the investment business throughout the first half of 2025. We have grown our established investment platforms, but we have also executed new business initiatives, for example, establishing our new offshore service vessel platform. During the last quarter, I explained that we have been working on a variety of transactions related to the renewal and decarbonization of the global fleet. And we had, for example, taken delivery and assumed the management of one of our first few dual-fuel methanol container vessels, highlighting our innovation and developing projects also based on new fuel concepts. In recent months, in the investment and project business, we continue to focus on contracting newbuild projects in shipping. In the first half of 2025, we initiated large-scale newbuilding projects with a total investment volume of approximately USD 800 million for partners and investors. This will contribute visibly to the AUM growth upon delivery of the vessels in the coming years. In this context, the key milestone was the order for the first vessels of our new offshore service platform. Together with French infrastructure investor, Eurazeo and the family office in Europe, we built and operate up to 6 specialized service vessels for offshore wind farms and the planned investment volume for this first offshore project is up to USD 150 million. In the Energy Infrastructure segment, we continue to optimize our Latin American portfolio alongside the sale of a 51-megawatt PV plant in Jamaica, the construction of a 65-megawatt PV park in Guatemala was successfully completed. At the same time, we're increasingly focusing on Europe as a strategic growth market with very interesting energy dynamics. The following slide now, if we move on, illustrates our AUM development during the first half of 2025. We have seen additions of EUR 0.4 billion in AUM from left to right, basically. We have seen some revaluation effects of around EUR 0.3 billion, and we have done some exits of around EUR 0.5 billion during the first half of 2025. On a net basis, we have seen EUR 0.2 billion in AUM growth or an increase year-on-year compared with 30th of June last year of 10%. Energy transition-related AUM make up around 1/3 of total AUM. And as I mentioned earlier, during the first half of the year, we have executed transactions of around EUR 1 billion. And given the newbuilding order book, I think what is a very strong argument is that we see a good visibility or we have a good visibility on further AUM growth in the coming years. And with that said, I would like to hand over to Philipp, who will present some of the financial highlights of Q1 and Q2 2025.

Thanks, Constantin, and good morning, everyone, also from my side. Turning to the financial update, maybe prior to digging into the details in a nutshell, the half year results for this year clearly demonstrate that MPC Capital continues to deliver on our strategic as well as on our financial agenda. This is despite the obvious complex macro environment. Our operations continue to perform well and strong. Our balance sheet remains extremely robust. And as mentioned by Constantin, we have been laying a solid groundwork to continue our profitable growth path going forward. So let's start the review of the half year with some more details of the P&L. Group revenues for the first half of 2025 came in at EUR 21.6 million, slightly above the prior year's EUR 21.2 million. Having said this, the revenue mix between transaction and fees and recurring management fees continues to shift in favor of recurring management fees, which reflects obviously the buildup of our asset under management base and accordingly, the recurring nature and quality of our revenue base increases further. Management fees are up 5% year-over-year to EUR 18 million in 2025. The first half of 2025, obviously driven by growth in AUM, which are up 10% over the past 12 months, which is broadly in line with the run rate AUM growth we've seen over the past years. Transaction fees amounted to EUR 3.1 million, a shade below the value of the same period of 2024. Activity levels have been solid, in particular, in the maritime business, where transactions included both asset disposals and acquisitions. And importantly, and as already mentioned by Constantin, we have executed on a number of vessel newbuilding deals in the first half of 2025 in the volume of $0.75 billion, which are not reflected in our half year financials. The project volume will contribute to AUM growth, management fees and transaction fees over the coming 2 to 3 years as the vessels are being constructed and delivered. Turning to co-investment income. Co-investment income came in, in total of EUR 10.4 million compared to EUR 17.2 million in the first half of 2024. As discussed also at previous occasions, the prior year period has been strongly influenced by exceptionally high proceeds from container newbuilding projects. And in contrast, the first half of this year was mainly driven by running yields from our existing portfolio. I'll dig into this in a minute a little bit more. But this development and the lower co-investment returns was fully in line with our expectations and also baked into our full year guidance accordingly. Before turning to the bottom line, let me have a word on cost structure. You will recall that 2024 included significant one-off expenses in relation to the acquisition and integration of Zeaborn Ship Management into our technical ship management platform. With those one-off expenses behind us, our cost base developed exactly as planned in the first half of 2025 and the cost structure now reflects a more normalized level for the periods also going forward. Importantly, as mentioned, recurring management fees today are essentially covered by our operating cash costs, which is a key milestone, which we already highlighted in Q1, and we are happy to see this development continuing in the second quarter of 2025. Turning to the bottom line. Earnings before taxes came in fully in line with our expectations at EUR 12.8 million compared to EUR 16.5 million in the prior year period. As noted, this delta is mainly attributed to the lower co-investment proceeds. However, turning to -- and looking at net earnings and earnings per share, our net results post taxes and post minority interest is up substantially by about 15% compared to the first half of 2024. This is mainly on the back of lower minority interest included in the earnings before taxes. That minority interest was mainly associated to co-investment returns in the first half of 2024 and lower tax expenses. So despite a lower earnings before taxes figure, we were able to increase substantially by 15% our net earnings in the first half of 2024. Let me spend a moment on the balance sheet and financial position. Our equity ratio increased further to about 84% at midyear compared to 81% at the year-end 2024. This again underlines a very healthy structure of our balance sheet, giving us substantial flexibility to develop the business further. Cash balance stood at about EUR 23 million as of end of June 2025 and the decline compared to the year-end figure of 2024 is mainly due to the dividend payment done in June, investments in our service platform and co-investments as well as temporary working capital effects. And during the remainder of this year, we expect liquidity position to increase again. But in any case, we see liquidity to be strong and sufficient to support our growth ambitions going forward. Looking at our co-investment portfolio. As you know, the co-investment portfolio is the main asset on our balance sheet. Therefore, we want to drill a little deeper into this aspect of the balance sheet. As demonstrated over the past years and as again, clearly reflected in our half year financials, our co-investment portfolio has evolved into a key component of our balance sheet and remains a significant and visible source of income for our overall business model. We have been mentioning that according to German accounting standards, our co-investments are recorded at historical acquisition costs. On a mark-to-market basis, the portfolio is valued at around EUR 127 million as of end of June 2025, which is about a 40% markup on the book value recorded on our balance sheet. And this implicit hidden reserves obviously underscore both the performance of our portfolio and the embedded earnings potential from the portfolio for the coming years. Drilling a little bit into co-investment returns. On the graph on the rightmost side, you see the breakdown of our co-investment returns for the first half of 2025 and 2024 by type of return. As a reminder, in general, we distinguish between 2 categories of co-investments. Firstly, more opportunistic investments, which typically generate limited running yield, but deliver more back-ended returns upon exit. And secondly, long-term strategic investments where running yield is the main driver of returns and exits play a less prominent role. And as you can see from the chart and as touched upon in the course of the presentation, 2024 was dominated by one-off exit proceeds from co-investments. And in contrast to the first half of 2025, the income contribution has shifted towards recurring yields from our portfolio. This shift is partly structural, reflecting the buildup of our more strategic and long-term co-investment portfolio. But at the same time, obviously, opportunistic and exit-driven strategies will continue to be a part of our strategy and our portfolio mix when it comes to co-investments. To wrap up the financial update, let me have a word on guidance, and let me reiterate our guidance for the full year. Based on a strong first half performance and a very good visibility on both revenues and earnings for the remainder of the year, we are happy to confirm our guidance. We continue to expect group revenues to come in between EUR 43 million and EUR 47 million for this year and expect earnings before taxes to come in between EUR 25 million and EUR 30 million. Importantly, achieving this guidance, both in terms of revenues and EBIT will not depend on, let's say, extraordinary transactions or exits. The first half year results demonstrate that our revenue base is increasingly driven by recurring management fees, which are complemented by steady transaction fees and strong yields from our co-investment portfolio. And this provides us with very strong visibility both for the remainder of the year as well as for growth and profitability in the years thereafter. And with that, I'll pass back to Constantin for an outlook and a wrap-up.

Yes. Thanks, Philipp. Let me continue now with the outlook section on the next slide, please, which basically shows that over the past decade, we have built a strong foundation of AUM. It shows the AUM development over the last 10 years that together with our strategic positioning, in our view, provides an excellent platform for further profitable growth. And as shown in the graph, we have increased at an average annual rate of around 12% with energy transition-related AUM growing at an even faster pace. And looking ahead to the next 5 to 10 years, we aim to sustain this momentum, targeting annual growth of around 10% to 15%. And this ambition is basically underpinned by 3 key factors shown on the right-hand side. Firstly, it is structural growth markets. We are confident in achieving our targets because we do operate in markets characterized by structural growth, specifically those requiring substantial investment in capital-intensive maritime and energy infrastructure. Secondly, our refined strategy. We have a proven track record over the past 10 years with a strong execution capability and a robust pipeline that we believe will continue to position us well to benefit from favorable supply and demand dynamics in maritime and energy infrastructure sector. And our refined strategy enables us to capitalize on these opportunities as we have shown again in the first half of this year, where we have been able not only to transact on EUR 1 billion in transactions, but also to line up a tangible visible pipeline of AUM that will over time, come into our management. And thirdly, but definitely not least, and Philipp alluded to that, a healthy base because we will do all this from a balanced and resilient balance sheet that gives us not only flexibility, but also stability that we need in order to support our growth ambitions. If we then continue to the next slide and before we open the floor for questions, allow me to briefly wrap up today's session and share our outlook once again in a focused form. We are -- and I did mention that in my initial words, we are navigating in a period of considerable geopolitical and macroeconomic uncertainty. But despite these challenges, we have not just delivered good results, but I'm also confident that we, at MPC Capital, are very well positioned for what lies ahead. Our platform is robust, and we're active in structurally attractive markets as we firmly believe markets that continue to benefit from long-term megatrends. And this is a very important basis for both investment demand in maritime and energy infrastructure and also the evolving investor requirements around funding and capital allocation. Our strategy remains clear. We are committed to reinforcing our position as a focused and leading infrastructure investment manager and operator across the maritime transport and energy sectors. More specifically, we have high visibility on top line growth, our growth in AUM and earnings is progressing in line with our refined strategic direction. And we look at a very strong pipeline of projects that we have already executed upon and that we will continue to execute in the second half of 2025 and beyond. This is being done from a solid financial foundation, providing us the flexibility, as I said, and we will continue to maintain a very disciplined capital allocation strategy. And finally, as reflected in our 2025 financial guidance, we anticipate that we will be able to translate that into further profitable growth, and we remain focused and confident as we advance on our journey. And with that said, back to you, Judith for the Q&A.

Yes. Thank you very much for your presentation, Constantin and Philipp, and congratulations on your growing performance. Ladies and gentlemen, it is your turn now as we move on to the Q&A session. [Operator Instructions] And we have one hand up from Christoph Hoffmann. You should be able to speak now.

Three questions from my side today. So firstly, on the cost cuttings you mentioned, are you already at the sustainable level? Or should we, yes, expect more cost savings in terms of personnel and other costs? And then secondly, your biggest co-investment is in MPC Container Ships, obviously. And they lowered the payout ratio significantly. So can you please share your thoughts on how this will affect MPC Capital in the short and also in the midterm? And then lastly, the operating cash flow were quite low in the first half of the year. So what can we expect in the second half? That would be it.

Yes. Thanks, Christoph, for the questions. I'll take it piece by piece. On the cost structure, you mentioned cost cutting. I would not call it cost cutting. We've, as mentioned, seen integration-related one-off expenses in the prior year, both in the first and in the second half of 2024. Those -- the integration measures related to Zeaborn are completed. So therefore, you can -- looking at our cost structure, assume that maybe with, let's say, certain efficiency improvements here and there, this more or less represents the recurring and normalized cost structure. On MPCC and the dividend, you're right. The capital allocation policy and dividend policy has been adjusted towards retaining more cash in the company. This is basically reflected and anticipated in our full year guidance for this year. We will be seeing slightly lower dividend payments in the second half, but this is expected and reflected in our full year guidance. On operating cash flow, you're right, on the low side for the first half. I mentioned certain working capital effects. You will see that if you look at the balance sheet, we have quite a significant step-up in receivables building up working capital. These are basically transaction fees related to transactions closed in the first half of the year, where the cash will only be collected in the second half. So you will see a significant step-up in operating cash flow and cash position, therefore, in the second half of 2025.

[Operator Instructions] And it seems like there are -- there is one more question. Could you please explain the decrease of the payments to the minority shareholders?

Sure. The minority shareholders or minority interest included in the 2024 financials were mainly co-investors of ours in co-investments that we controlled and did. So the payments were basically returns on co-investments, which we realized and passed on to minority shareholders. Those co-investments were completed, and therefore, there are no minority interest included in our 2025 financials.

Thank you very much. And in the meantime, we have received no further questions. We, therefore, come to the end of today's earnings call. Thank you for your interest in the MPC Capital AG. Should further questions arise at a later time, please feel invited to place your questions to Stefan from Investor Relations. Thank you, Constantin, Philipp and Stefan, for your presentation and the time you took to answer the questions. It was a pleasure to be your host today. I wish you all a lovely day around the world and successful business. With this, I hand over again to Constantin for some final remarks.

Yes. Thank you, Judith, and thank you, everyone, for your interest. As we mentioned throughout the presentation, we believe we are well on track with our refined strategy. We see a very positive -- we have a positive outlook not only for the second half of this year, but also beyond. And we look forward to your continued support, and we are excited about what lies ahead. And on that note, thank you very much. Thanks for hosting us, Judith, and all the best. Take good care. Bye-bye.