MLP SE
XETRA:MLP
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
American Express Co
NYSE:AXP
|
Financial Services
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Target Corp
NYSE:TGT
|
Retail
|
|
US |
Walt Disney Co
NYSE:DIS
|
Media
|
|
US |
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
|
US |
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
4.77
6.57
|
Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Estee Lauder Companies Inc
NYSE:EL
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Church & Dwight Co Inc
NYSE:CHD
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
American Express Co
NYSE:AXP
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Target Corp
NYSE:TGT
|
US | |
Walt Disney Co
NYSE:DIS
|
US | |
Mueller Industries Inc
NYSE:MLI
|
US | |
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Earnings Call Analysis
Summary
Q1-2024
MLP Group reported a robust first quarter in 2024, with total revenue reaching EUR 284 million, an 8% rise, driven by impressive performance in wealth management and interest rate businesses. EBIT stood at EUR 37 million, reinforcing stability amid a challenging German economy. The company maintains its 2024 EBIT forecast of EUR 75-85 million and aims for EUR 100-110 million by 2025. Assets under management reached EUR 59.3 billion. The company continues to invest in digital strategies and AI to enhance client services, positioning itself advantageously for sustainable growth and expanding its non-life insurance portfolio.
Good afternoon, ladies and gentlemen, and welcome to the MLP SE conference call regarding the publication of the results for the first quarter of 2024. [Operator Instructions] So let me now turn the floor over to your host, Pascal Löcher.
Thank you very much, and welcome to MLP's conference call to our results for the first quarter of 2024. With me today is our CFO, Reinhard Loose. He will guide you through the presentation. And of course, we are happy to take your questions after the presentation. So please go ahead, Reinhard.
Thank you, Pascal, and good afternoon, ladies and gentlemen. First of all, allow me to present the key facts from the first 3 months of the financial year 2024. MLP is making good progress, and we have enjoyed a successful start of the year. We increased total revenue of MLP Group to EUR 284 million in the first quarter, which represents a new high. We were particularly successful in the wealth competence field, especially in wealth management and interest rate business. With earnings before interest and taxes, EBIT of EUR 37 million, MLP Group is right on track to meet our annual forecast. We reaffirm our planning to record EBIT of EUR 100 million to EUR 110 million by the end of '25. In the last few years, we have worked hard to achieve the broad and diversified positioning of our group, which highlights the strategic competitive advantages that we can secure and which is once again paying off. In addition to this, we have a good handle on those factors we can influence ourselves, strategy, costs and above all services to our clients. We are successfully addressing the issue in the currently difficult overall economic climate in Germany. This is not only reflected in the excellent stability of the MLP Group, but also by the fact that we still have significant growth potential in our business model, in which we support and advice private institutional and corporate clients and all financial matters. Our clients and our consultants are increasingly benefiting from our successful digital strategy. We are also increasingly using artificial intelligence in areas where it benefits clients. Strategic success factors, which particularly include our assets under management and non-life insurance portfolio volumes continue to play positive overall development for the MLP Group. Several important trends will continue to shape our markets and the way in which we work for our clients in [ the mid-term ]. And they are also providing support on this promising path. Irrespective of the requirements in terms of sustainability, which we are actively addressing as pioneers in the field of client consulting, the ongoing process of digitalization will play a key part. However, we definitely do not consider the use of digital concept and artificial intelligence as an end in itself or a means solely to increase cost efficiency. Our key premise here is whatever we do in this field needs to benefit our clients, which is entirely in the interest of our consultants, and it leaves them more time to complex financial issues. In this comprehension, we are also working consistently on further developing our internal processes. In other words, we are unlocking significant additional potential in both short and midterm through responsible integration of robotics and artificial intelligence. As MLP Group, we are also benefiting greatly from other relevant trends in our markets. Above all, from the fact [ worth ] in Germany is continuing to grow as well as the requirements resulting from personal asset successions. This increases the demand for highly qualified consulting services in this important and difficult area. In our group, we are perfectly positioned to handle these challenges. The same applies to the consulting fee needs arising from inflation. Last but not least, the demographic development is becoming an increasingly important factor both in the private client area and for companies. You can find an overview of revenue development on Slide 5 of the presentation. Total revenue increased by 8% to around EUR 284 million in the first quarter, setting a new record. The MLP Group once again benefited from the stable revenue structure we have developed and established over the last few years. Our total revenue has enjoyed significant growth over the course of the last 20 years. At the same time, we have substantially expanded the proportion of recurring revenue in the last few years, which also makes a valuable contribution to our stability. Broken down by competence fields, MLP achieved particularly strong revenue growth of 27% in the Wealth Competence Field. This was largely driven by the wealth management activities and the interest rate business. We were also able to significantly increase revenue in real estate brokerage, which is also assigned to the wealth competence field. [ Albeit ], obviously starting from a low comparison due to the last year's downturn on the real estate market. Our group also recorded significant growth of 6% in the property & casualty competence field, which compromise the non-life insurance business with both corporate and private clients. The Life & Health competence field, which covers old-age provision and health insurance, we recorded stable revenue. As expected, revenue in the other competence field, which includes the real estate development business as well as other commissions and fees suffered a significant decline. This can be attributed to the known market turbulences in the real estate business and our active reduction of involving risks. The growing and continuing trust of our clients and our consulting services is also reflected in the key figures. These are extremely important for our future revenue development. It is therefore all the more pleasing that we have been able to raise these key figures to new [ fees ]. The assets under management in the MLP Group were EUR 59.3 billion as of the 31st of March. As such, we have long reached the point where we are on par with their own private banks in terms of this [ volume ]. In terms of the managed premium volume in non-life insurance, we've also succeeded in significantly increasing this figure to EUR 719 million in the first 3 months. This is roughly comparable to a medium-sized non-life insurer in Germany. The consultants in the MLP Group is serving 581,200 primely clients as of the 31st of March. The gross number of newly acquired family clients was 4,400. We also supported 27,700 corporate and individual clients in the MLP Group. The number of consultants in the MLP Group was 2,069. This figure still includes a shifting effect due to the successful introduction of the trainee program in mid-'23, which we use to prepare the participants for their future role as MLP consultants. With this program, we are encouraging young talents to join us and take the opportunity to launch their career with the added security of an employment contract. This allows participants to prepare themselves in a highly targeted way for a subsequent role as consultants, including all the prospects that self-employment offer. A total of 159 trainees had already joined this program by the end of March 24. The current income statement is presented on Page 9. Our group was able to significantly increase EBIT to EUR 37 million in the first 3 months of '24. Above all, this can be attributed to the strong revenue development observed in the wealth and property and casualty competence fields. The Wealth Competence Field also benefited from the Wealth Management performance fees collected at [indiscernible]. The seasonally strong business performance in the Industrial Broker and DOMCURA segments as well as the client consulting for nonlife insurance at MLP is reflected in the property and casualty competence fields. The Life & Health competence field proved stable in the first quarter of -- '24. However, earnings in the first 3 months were negatively impacted by real estate development, which we recorded in the other competence fields. In light of the disruptions in the real estate markets, we have initiated measures very early on here. Our measures will become even more pronounced over the coming quarters. Overall, the first quarter of '24 once again underlines the excellent earnings stability of the MLP Group, while also highlighting comprehensive growth potential. If you now take a brief look at the right-hand section of the slide, you will see key figures that underpin our solid balance sheet. In comparison with the balance sheet date in '23, shareholders' equity rose from EUR 532 million to EUR 557 million. The regulatory core capital ratio was 20.2% as of the 31st of March. The liquidity coverage ratio, LCR, which serves as a benchmark for the short-term liquidity situation in stress scenarios and as such, is an indicator of resilience is 1,890%. This is, therefore, well above the ratio of 100% only required by the supervisory authorities. We confirm our EBIT forecast for '24 and still anticipate recording an EBIT in the range of EUR 75 million to EUR 85 million for the current financial year. We have based this forecast on the assumption of continued growth in the competence fields of Wealth and Life & Health. The plan for the Property & Casualty competence field is to remain stable year-on-year. Risks continue to exist due to the development of individual markets, above all, relating to a significant correction on the capital markets or a slower-than-anticipated recovery of the real estate markets. The growth opportunities [indiscernible] recently passed by the German government, on the other hand, could have more of a supportive effect here. Among other things, the act provides incentivation for those looking to invest in new real estate assets as they now benefit from improved tax offsetting options. Starting from the forecast for '24 just confirmed, please now allow me to move on to our planning that we reaffirmed again. An increase of EBIT to between EUR 100 million and EUR 110 million by the end of '25. This is primarily based on 3 central strategic success factors. The further increase in assets under management in the group, the ongoing expansion of a nonlife insurance portfolio volume as well as sustainable growth in all parts of the MLP Group. In particular, we expect the brokerage of old-age provision products to make an ever-increasing contribution to our earnings growth. More and more citizens are now realizing the importance of having supplementary old-age provision in place. People are also becoming increasingly aware the pressure on the statutory pension system, not least due to the disputes in the coalition government regarding its pension [ package too ]. In addition, real estate brokerage remains important for our targeted increase in earnings by the end of '25. Moreover, we anticipate an upturn of real estate development. In fact, property investment is often a prudent option when seeking to diversify large portfolios, particularly among MLP's high-end clientele. At the same time, the new reality in terms of the interest rate now seems to have been noticed and accepted by consumers. Acquisitions are not yet included in our planning for '25. However, they remain part of the MLP Group strategy agenda. In addition to this, we are continuing our consistent cost management approach to further support positive EBIT development. Ladies and gentlemen, please now allow me to provide a summary. Firstly, the broad and interlinked positioning of our group gives us a strategic competitive advantage. Our approach of offering a high-quality financial consulting service combined with increasing digital support is really paying off. Secondly, thanks to a good start. We have already moved closer to our targeted figures for the financial year. And thirdly, our focus is on our planning for the end of '25, which we have once again reaffirmed. Accordingly, our sites are still firmly set on recording EBIT of EUR 100 million to EUR 110 million. Thank you very much for your time and your interest. I'm now happy to take any questions.
[Operator Instructions] And we'll start with Henry Wendisch from NuWays.
You might guess I have the same question I always ask at the start, what are the performance fees that you actually recorded in Q1 and how many capital in close to the assets under management, could you record as well? Then I have some follow-up questions. First one is other operating expenses. It actually was reduced by 5% -- and 6.5% and could you please give us some more color why this happened? I started last year in Q1, you had the [indiscernible] seminar and jubilee, which could have been a factor that -- so the comparable base was a bit higher. But if you have any more color on other operating expenses, while they dropped this year that would be nice?Then third question on personnel costs. The headcount increased by some 6% and also wage inflation by some 5.5% came in Q1. Is this a run rate for the year that you would expect to be fair regarding headcount, so 6% year on the full year? And also, are there any more wage inflation or wage increases planned for the people employed at the MLP Group? And 2 more questions. You mentioned that you have 159 trainees at the end of Q1. How many of those do you think will become MLP consultants in the course of this year? And then the last question is the net liquidity figure that we used to publish as well in the presentation, and I couldn't find it now also not in the report. If you have that number for us, it would be very much appreciated.
Some expected, some not so much, but I will try to answer all of them. And as always, we started performance fees, we have reported in the first quarter performance fees of EUR 3.8 million. yes, this is #1. Then our asset under management development, we had in the first quarter net inflows of EUR 200 million. And the performance -- positive performance effect of [ EUR 2.2 billion ]. Then your next question was concerning other operating expenses. What was the reason for the reduction. And you gave a hint, and I can confirm your hint. The main point I have on my mind at the moment is indeed last year, we had our, let's say, very big so-called [indiscernible] seminar, the assembly of all MLP participants. And -- this is -- was not affected in this year as long not in this size, and therefore, we have reduction there in the other expenses. Then your next question was concerning headcount. There, I think 2 issues are perhaps worthwhile to mention. We see, like many other in the industry need for people in the, let's say, our service areas in the wider sense, and we have a quite significant number of vacancies there, and we try to fill these vacancies. And therefore, we could find some people in the beginning of the year. And that was one reason for the headcount increase, the main reason and also one reason for the overall increase in staff cost. Another outlook, let's say, for the year, yes, we will also increase the wages for our employees during the course of the year to be quite a little bit more precise. We publish this tomorrow. Therefore, allow me not to publish it is now, but more or less the numbers for the first quarter, I think we can be forwarded also to the other quarters. One reason also for increase in the staff cost is the next question you answered -- you asked, sorry, concerning the trainees, in mid-'23, as explained, we changed. And as you know, we changed to a system where we now do not hire our consultants directly as self-employed, but we give them the opportunity to start with a trainee contract. And after then 4 to 6 months, they can change to consultants to sell-employed consultants. And these trainees obviously also increased the staff costs in comparison to the first quarter of last year where they were not included. And then there was perhaps a little bit misleading the number I said. I said up to end of March '24, we had 159 trainees in our trainee program. That means that the majority of these trainees already have changed to consultants. And we now, at the end of the quarter, have 47 trainees already onboard being part of the program. And we expect that, let's say, 85% of these trainees then at the end of the [ 4 to 6 month ] period will change to become -- to get -- to change to the consultant status. And your final question was concerning net liquidity at the end of the quarter, we have a little bit more than EUR 200 million net liquidity in our books. And I hope we answered your question, Mr. Wendisch.
So next up is Jochen Schmitt from Metzler.
I have 3 questions, please. Firstly, on your revenue outlook for nonlife insurance brokerage. Why do you expect your revenues to remain only stable in '24 -- because in Q1, you reported an increase by 6%. Second question, DOMCURA posted a substantial rise in personnel expenses to EUR 7.4 million in Q1. And you mentioned a couple of reasons for that in the quarterly report. My question is, what should we assume for the current quarterly run rate of DOMCURA's staff expenses? And third and last question, do you expect the segmental EBIT of DEUTSCHLAND Immobilien to improve in the next quarters? And also in this context, you mentioned further realignment measures of this segment during your presentation, if I understood correctly, does this mean that we should expect some restructuring costs to be booked in '24? These are my questions.
Mr. Schmidt, good questions, difficult questions. First, a difficult question was concerning the outlook in the Non-Life segment, which was -- or is still stable, although we've seen 6% rise in the first 3 months. Let's say, this table has some positive and some negative deviations. And I think we are, let's say, on the positive [ part ] of the stable sector here. Perhaps allow me to explain why we put non-life insurance revenues are stable for this year because I think this is important. The non-life insurance sector is for us one of our growth fields. And now you may ask or have -- or perhaps have already asked in last year, why do we set this as stable for '24? One reason is that we have, let's say, canceled some contracts which has a revenue impact, but no profit impact. And this, let's say, negatively impacts our revenue in '24. And our goal is now to perhaps increase even more. And part of this effect we will see in the next, in the next quarters. And therefore, we are a little bit cautious there. Perhaps this effect could lead or will lead to not as good a result as the first quarter. And that was the, let's say, long explanation for the reason why we still have our outlook for nonlife insurance on stable. Number two, DOMCURA, and this obviously is an important part in what I just explained in the non-life sector and you found out you commented that the staff costs were increasing. You will not see the same increase in the next 3 quarters. We had some, let's say, restructuring sounds a little bit heavy, but we had some measures taken there, which led to an increase in costs in the first quarter, but it's not planned to continue to repeat these activities in the next quarters. Therefore, the increase in the whole year will be much lower than in the first 3 months. And your last question was concerning our segment, DEUTSCHLAND Immobilien which started negatively. Also, just to explain here, we stopped the development of new projects last year, beginning of last year with the crisis in the real estate sector. And we plan to continue or to start new projects at the end of -- or the middle of '24. And therefore, we expect -- we are not very -- let's say, I could imagine that we won't see positive results in the segment in the whole year, but I also believe that the results of the first quarter, the negative results will be higher, will be more negative or was more negative than what I expect for the next quarters. And I hope I could answer your questions.
Yes. Just one question last. So this does probably mean that we should not expect any restructuring costs in the segment, DEUTSCHLAND Immobilien to be booked in the next quarters. Is that right?
At the moment, I wouldn't expect restructuring costs. But you heard that also in the text, I explained that, obviously, we are still cautious in this segment. There are some positive signs, but there is still a lot of unstability in the overall segment. And therefore, we are definitely not as positive in this segment as in all the other segments. And -- but from today's perspective, we won't see restructuring costs.
So next question comes from Philipp Häßler from Pareto Securities.
I have 3 questions. Firstly, on net interest income, i.e., interest revenues less expenses were quite good again in Q1, up quarter-on-quarter. Maybe you could give us an outlook for the next quarters? Would you expect net interest income to decline in the next quarters? And maybe you could share your thoughts on what the impact of rate reduction by the ECB will be on your net interest income. Then on Q1, in general, on your guidance, I mean, you had a quite a good start, I would say, with EUR 37 million of EBIT. If I take last year's Q2 onto Q4 EBIT, I think you would be already at the EUR 80 million, if I adjust for the write-down. So how likely do you see more positive guidance with the publication of H1 results? And then a more technical question. Your nonlife insurance portfolio volume went up by EUR 32 million quarter-on-quarter. I noticed that always in Q1, at least during the last years, that always increase a little bit more than in the other quarters. So maybe is it just a coincidence? Or is there a special reason for this pattern that always in Q1, this nonlife insurance portfolio increases a little bit more than in the other quarters?
And I'll start with the last one because that's the easiest one. There is indeed a seasonal effect in our nonlife insurance sector. The majority of the contracts are renewed for the 1st of January. And that means if you deal with customers during the course of the year, they might sign a contract in, let's say, August '23 for starting in January 2024. And that is the reason why, first of all, the overall revenue is the highest in the first quarter. And this is also the reason why the jump in our portfolio is the highest in the first quarter. This was question number one. And then we come to the interest. Yes, income and the outlook, we all together, let's say, the majority expects a rate reduction of the ECB in June. And in our balance sheet at the moment, we definitely benefit from the existing ECB rates with our extremely high liquidity, which we which we have in the ECB, where we received a 4% interest rate definitely, and we have EUR 1 billion at the moment at the ECB, we will see effect if this rate goes down on the -- for our customers at the moment, we pay for 1-year contract which we have with our customers, we pay at the moment, 3% for the daily accounts. For [indiscernible] we pay 1.5%. And for the current account, the [indiscernible], we do not pay any interest rate -- and there, you can see that definitely, we are more flexible or, let's say, we are less flexible towards our customer than the ECB will be towards us. Taking this all together, we expect during the year, a reduction in our interest rate results, and we expect that the first quarter was concerning interest [ rate are there to the ] best of the year. And this is one reason that the only one this is one reason why we do not answer your second question, which was the question why we do not -- why we are not a little bit more positive concerning our outlook? And we see definitely on the interest rate, some question marks, which could also reflect and it's not the only reason, but one reason, which could also reflect in the capital markets and with our positively high income, which results from the asset under management, if we have due to the capital markets if we might see a reduction there. This could also have a negative impact. And finally, the real estate market, as I also explained towards to Mr. Schmitt. We see some, let's say, question mark in the real estate market less than 1 year before, but we still have some question mark. And that's the reason why we still are there, let's say, a little cautious perhaps, but we do not change our guidance for '24 at the moment. But taking this positive again, and now forget that the CFO is speaking, but taking a little bit more positive, definitely this extremely good start in '24 helps us to have, let's say, a good position for the next quarter.
So there are no more questions at the moment. [Operator Instructions]
Okay. So there are no further questions. I would like to thank you for taking part in our conference call. And of course, you can reach us if any further questions arise later. Please allow me the following indication. Today, we will also publish the invitation to our Annual General Meeting, and you can find all the details regarding our AGM on our website later in the afternoon. Having said this, I wish you a good afternoon. Thank you, and goodbye.
Thank you, bye-bye.