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Dear ladies and gentlemen, welcome to the publication of MLP regarding the results Q3 2021. At our customers' request, this conference will be recorded. [Operator Instructions]May I now hand you over to Andreas Herzog, who will lead you through this conference. Please go ahead, sir.
Well, thank you, operator, and welcome, ladies and gentlemen, to the presentation of our Q3 results. I see a lot of participants in this call, and thanks for joining. As we have also a lot of interesting topics today, I would like to hand over directly to our CFO, Reinhard Loose, who will guide you through the numbers and the developments. Reinhard?
Andreas, thank you very much. Good afternoon, ladies and gentlemen. We are very satisfied with the performance we've seen in the first 9 months of the year. The MLP Group was able to further accelerate its successful course of the last few quarters. We recorded growth in all fields of consulting and were able to increase total revenue to a new record level despite operating in an environment that continues to be characterized by a high degree of competition, the effects of the coronavirus crisis, severe regulatory pressure, low interest rates as well as a whole host of political uncertainties.The development observed in real estate brokerage and wealth management was particularly pleasing. In terms of EBIT, we are significantly above the previous year's figure after 9 months. Our broad-based growth also shows how we generate added value within the MLP Group for our clients and thereby, for the company through diverse perspectives and areas of expertise.As already communicated, MLP is now expecting to significantly surpass the upper end of the previously forecast EBIT corridor of EUR 55 million to EUR 61 million for the year 2021. We are particularly focused on the year 2022 as we still plan to increase our EBIT level to around EUR 75 million to EUR 85 million by the end of that year. You can find an overview on revenue development on Slide 5 of the presentation. Total revenue rose by 20% to EUR 632.2 million in the first 9 months, which is a new all-time high at EUR 608.8 million commission income, that means revenue from commission and fees, increased significantly and represented the biggest share of this positive development. Taking the third quarter on its own, we have achieved record growth in total revenue of 27%.Our growth from January to September came from all consulting fields. This once again underlines the diversity and stability we now have in our revenue base, thanks to the strategic further developments over the last few years. In other words, the MLP Group is in a stronger position than ever before in its 50-year history.Taking a look at the breakdown by consulting field for the first 9 months of the year, we can see the strongest growth rate in real estate with an increase of 53% and wealth management with an increase of 35%. The excellent development of wealth management can be attributed in part to highly successful new business at both FERI and MLP Banking. At MLP Banking, MLP's private client business, we were able to record a new -- sorry, a net inflow in excess of EUR 1 billion for the first time at the end of September.Furthermore, as already communicated, the performance fees accrued for the performance of investment concepts in wealth management are significantly above the same period in the previous year, and obviously also well above our planning for this year. However, I will come back to this later during the outlook.As already mentioned, MLP also recorded strong gains in real estate brokerage in the first 9 months of the year. In association with DEUTSCHLAND.Immobilien, we enjoyed a significant increase in revenue to EUR 39.7 million here. This allowed us to continue and further accelerate the significant growth already recorded after the first 6 months of the year in this consulting field.The 53% increase in revenue, following on from 39% recorded after the first 6 months, once again underlines the importance of real estate for our clients, and that more and more consultants are successfully positioning this as part of their full scope client consulting service. Loans and mortgages also recorded a significant increase in revenue at 17%. The strong performance in the old-age provision field was also pleasing. Following the declines encountered throughout 2020 due to the effects of the coronavirus pandemic, we recorded a significant recovery here.Revenue in the first 9 months of 2021 rose by 11% over the same period in the previous year, which is also the result of intensive client support. The increase came from the fields of private and occupational pension provision. In the case of the latter, the situation was particularly challenging in the same period of the previous year as many employers clearly faced different challenges entered other priorities while the coronavirus pandemic was underway, all the more reason for us to welcome our sustained return to growth in this field, in which MLP is operating as the largest German broker.Our important key figures continue to develop positively. Indeed, as of 30th of September, we were able to increase the Group's asset under management to an all-time high of EUR 52.9 billion. We have benefited from value gains and inflows here, both at FERI and MLP Banking. We were able to further increase the non-life insurance portfolio volumes managed by the MLP Group to EUR 549.3 million as of 30th of September. As such, we have reached a level comparable to mid-sized non-life insurers.[indiscernible] that is the other brands shown on the slide here, each stand for specific areas of expertise at our group companies and in our business segments. However, the key in the MLP Group is a way in which these various perspectives and areas of expertise are networked. Indeed, this approach has already resulted in added value for the Group.Among other things, the fact that every company, which has joined the Group in the last few years, has significantly increased its earning serves to underline this. We are continuously building on and expanding this synergy. Allow me to give you an example. TPC primarily serves midsized enterprises, addressing issues and questions relating to occupational pension provision. We are now in a position to also offer precisely these corporate clients highly competitive insurance cover solutions through our most recent group member [ FOM ]. This obviously also works the other way around for existing FOM corporate clients. The key benefit here is not only that we have the expertise in the Group, but are already sitting at a table with the respective corporate clients and can therefore build on good existing relations. Further development of the MLP Group obviously also involves the topic of digitization.Over the last few years, we have already provided several reports on our proven approach, our, as we call it, intelligent end. In MLP's private client business, we see this as face-to-face consulting complemented by additional digital offers and services. We are now keen to build on and substantially expand this customer-oriented approach, above all through data management. At the same time, we are continuing to expedite the digitization of processes.Please now allow me to move on to the income statement on Slide 9 of the presentation. At EUR 47.3 million after 9 months, MLP recorded a significant increase in EBIT over the previous year's figure. This was driven primarily by the significant increase in EBIT to EUR 21.8 million in the first quarter and to EUR 15.9 million in the third quarter.The next slide shows you our balance sheet. As of the balance sheet date, shareholders' equity rose slightly from EUR 454 million to EUR 462.1 million. The core capital ratio was 18.2% on the reporting date, meaning that we remain very well positioned. We are also anticipating a similar level as we move towards the end of the year.As of the 30th of September, the MLP Group served 559,500 family clients. At 14,500, the gross number of newly acquired family clients in the first 9 months of the year is well above the previous year. We also served 24,600 corporate and institutional clients. I've already offered the first impression of the additional potential that this holds within our group. 2,051 client consultants were working for MLP as of the 30th of September. The figure, therefore, remained constant relative to the comparative values for both the previous year and the previous quarter.Lingering effects of the restrictions associated with the coronavirus pandemic could also still be felt in the third quarter of '21, in particular in terms of canceled recruitment cells. However, in our young segment, we already have just under 450 consultants. For the full year 2021, we are anticipating a slight rise in the number of client consultants overall at MLP. Yet the quality of applicants will remain our focus here.Ladies and gentlemen, I will now move on to our outlook. Following the successful performance in the first 9 months, and as already communicated, MLP is expecting EBIT to be significantly above the upper end of the corridor of EUR 55 million to EUR 61 million for the year 2021. In this vein, we are adjusting our expectations in wealth management revenue and are now anticipating a strong increase for the year as a whole after the strong first 9 months.As already addressed when communicating our figures for the first half of the year, I would once again like to point out here today that we benefited greatly from performance fees in both the third and fourth quarter of the previous year. However, the target figure for the current closing quarter of '21 only compromise a low level of performance fees. We also have amended our forecast for the non-life insurance business and are now only anticipating slight growth for the whole year rather than significant growth previously expected.In the old-age provision field of consulting, we are turning to our qualitative assessment with slight positive development. Despite the recovery observed in the 2 previous quarters, our business not only here continues to face market-based risks and especially risk resulting from the effects of the coronavirus pandemic. However, we are still anticipating dynamic development in real estate brokerage as well as loans and mortgages.If you were to ask me why we do not further substantiate our forecast around 6 weeks before the end of the year, the answer would be that, like every year, the last week of the year will have a particular significant influence on the results for 2021. Among others, this includes whether we will once again collect performance fees and how our private client business is likely to develop in the remaining weeks. Yet irrespective of this, one thing we can already say for sure is that MLP will deliver excellent results in 2021.More than ever before, the focus of earnings target is on the year 2022. As such, we are not just planning for a significant increase in our earnings level for the end of the coming year, but can already deduce this today on the basis of key early indicators. Once again, we confirm our planning based on which EBIT is likely to rise to around EUR 75 million to EUR 85 million by the end of 2022.The overview on Slide 17 once again lists the growth areas that we had already highlighted at the start of the previous year and for which I already provided a detailed report when presenting our figures for the first half of the year back in August. There's one thing I would like to emphasize here. We cannot simply expect subsequent years to display the same kind of successful development in terms of performance fees in wealth management as we did this year, as we did this year or last year.In other words and as already explained at the start of the year, our 2022 targets are based on significantly lower performance fees than we are currently seeing. By implication, however, this means that our growth levers remain intact. For example, we are set to breakeven our young segment. The young consultants already on board, they are not only making an initial earnings contribution, their productivity is also set to increase over time. This will produce a powerful leverage for our business.I would now like to take this opportunity to tell you that we intend to present our new midterm planning as part of our 2022 press and analyst conference.Ladies and gentlemen, please now allow me to move on to the summary. Firstly, we recorded a significant increase in both sales revenue and profit in the first 9 months of the year. We will be carrying this momentum forward into the important closing quarter. Secondly, MLP will also record strong earnings in 2021, whereby the remaining weeks of the year will be crucial in terms of the concrete figure. And thirdly, our growth levers are continuing to develop as planned, and we are on track to reach our 2022 targets. Indeed, once again, we confirm our planning based on which EBIT is likely to rise to around EUR 75 million to EUR 85 million by the end of 2022.Many thanks for your time. I'm now happy to take any questions.
[Operator Instructions] We have a first question, it's from Olivier Calvet, Kepler Cheuvreux.
I have a few questions. I will take them one by one. The first one is on coalition building, in particular with regards to the old-age pension, let's say, impact -- provision impact. Can you shed some light on what we could expect or what we can really say at this stage on the impact that the coalitions plans are in old-age for your business?
Okay. Olivier, thanks. Okay, I'll answer your first question. It might be the difficult -- the most difficult question because at the moment, obviously there are no plans. We all know, I think here in the call that in the last government, there were some ideas concerning some restrictions. This idea was not or were not set in place. And therefore, definitely we are looking forward to what will come as a result of the final plans of the coalition. But at the moment, I find it a little bit early to comment. And definitely, we are looking very -- with some concerns, but nevertheless, after the first results or the first things we hear from there with not too many [ nervoucity ] or [ anxiety ] to the final plans. As you know, just for updating again with the final plans, which were, let's say, in the air, there were some effects also to our P&L, but very, very limited ones. And therefore, let's see what the results will be.
Yes. Okay. Fair enough. Second question, I was just wondering if you could come back to the real estate segment. You show the brokered real estate volume targets. I just wanted to know if you could remind us or let us know how much revenues your target is really in this segment, maybe breaking it down into brokerage and project development. Or said I guess on the brokerage part, is it fair to assume, let's say, a ratio between the brokered real estate sales and the volumes of around 8% to 10%.
In the brokerage, let's say, the gross margin in average is more around 7%.
Okay. Okay. Okay. And then the question still on the project development side, could you shed some light on what kind of targets you have there for next year?
Yes. As I said, we -- in the project development, we are seeing some delays. We, to also be quite honest, expected some more income and more -- a more positive development in this year, but we see delays, especially in the approval from the authorities. Positive part is that these projects, which, let's say, we started or initiated we will see next year. And therefore, at the moment, we have planned, let's say, on average to have something around 10 projects per year. But due to the delay in this year, we expect to see more projects than this 10 projects in the following year, meaning that might be the effect is -- that the effect is a little bit more positive than you could imagine from this interesting slide we have on Page 15 where we see this column, which as said growth in revenue including real estate. This is, let's say, a very simplified figure, the effect from real estate might be even higher.
Yes. Just can you remind us in terms of revenue contribution, maybe the average, let's say, contribution for a project or the average target you have over the full year because you talked about 10 projects on average over the year?
We're talking about 10 projects. Each project exists, again, very roughly and just as a thumb rule every project has more or less around 100 units, and a single unit can be around EUR 100,000 to EUR 150,000 each, meaning 10 to 15. But that is some growth. It can be even higher definitely.
Yes. Fair enough, Reinhard. That's fine. Okay. And then moving on to the 2022 EBIT guidance, I just wanted to come back to this slide and clarify the effect we might expect from the 3, let's say, bridge items that you list and from cost management notably because we have, let's say, roughly EUR 20 million of EBIT from the performance fees last year. And taking that out, of course, the question is how much upside, I guess, there is to the 3 EBIT projections released? And how much -- so on the revenue side and on the cost side, how much, let's say, room for cost reduction you have? Yes. So any color there to, let's say, offset the EUR 20 million-ish performance in contribution last year would be helpful.
Yes. Okay. So first, let me reiterate this plan that we stick to the target to reach between EUR 75 million to EUR 85 million, knowing how much performance fees we, this year, have in our books, meaning that we -- from the single topics, we have concrete plans and concrete not only plans, but concrete measures on our way to come to this target. And one of this levels is, as you mentioned, cost reduction. Just bringing one example, we are at the moment in the financial consulting segment, finanzberatung. In this segment, we are in the phase of a bigger change in IT, and this will reduce IT costs by a double-digit number -- million number next year. Obviously, there will be other costs and other investments next year, but the IT costs will go down significantly next year.And on the other side, as we said on the growth areas, definitely the main growth area for next year in our plans and in the projects we have in the pipeline will be, as mentioned before, the real estate area. But also in the other segments, at the moment, the outlook for next year is quite positive. And therefore, both together, cost reduction on one side and revenue increase on the other side that will lead us to this level I mentioned before.
Okay. And just to clarify, next year is it fair to say that you have about EUR 6 million or so of EBIT from performance fees in the guidance or to at least expect this?
In our plans, we lifted a little bit up, and we will see in our plans a number which is still single digit, but at the upper end.
Okay. Okay. And sorry, finally, just 2 housekeeping questions. First of all, on the earnings related to associates, if you could give us a sense of where you expect to -- the associates to develop? And second question on the AUM, how much of the increase is value gain? How much is net inflow?
On the consultants, let's -- you mean, the first question was concerning the number of consultants?
No, no, no, sorry, the associates. It's MLP is what I mean.
Okay. Then, sorry, can you repeat the question? It was a question if I got it correctly.
Just wondering if what kind of -- what is your expectation therefore, let's say, the earnings from associates there?
Let's say, obviously, I think the details for expectations for next year, we'll discuss in our press conference in spring. But let's go to our outlook for 2021 where we expect an increase in mortgages and financing, and which also will be reflected then in the numbers for the MLP for example, that this will continue to go up, and we are positive there on the outlook until the year-end. And I would -- I think I'm not too optimistic to say that we see a continuation of this trend also next year.
Okay. And on AUM? Yes.
And the AUM, the question normally of Mr. Haßler, I hope he allows me to answer you the question.
You can take it later if you want. I ask, sorry, too many questions.
Please Philipp -- no, I'm joking. I'm just seeing Philipp Haßler has also in the line for the questions. And I'm answering the question I expect from him. We had inflows, gross inflows in this year of EUR 9 billion and outflows of EUR 1.6 billion.
And the performance -- sorry?
And the performance is EUR 2.8 billion.
The next question is from Philipp Haßler from Pareto.
Yes, Philipp Haßler from Pareto. So I have to find another question now that the net inflows question has already been answered. Thank you for that. Yes. Firstly, on the inventory changes you booked in Q3, EUR 10.5 million use. Could you perhaps elaborate a little bit on this? What I mean is this that you made some progress on the project or was it that you have been granted building permits for land? Maybe you could shed some light on this? Then secondly, on your outlook for the current year, significantly above the upper end. Could you perhaps be a little bit more concrete or particularly in the old-age provision business? What have you seen so far in this quarter? Do you think last year's level is achievable? I mean, if we saw a good quarter, you could already reach your 2022 target this year. Maybe you could elaborate a little bit more on this, although I know you don't like this too much. And last but not least, non-life insurance business was very strong this year, plus 10%. This is also related to COVID-19 somehow, but that your customers look for more security, that they are more risk-averse. This is a trend, which may continue or has there been any special reason for this development?
You're welcome. The inventory changes, which was your first question, as you thought, it's the changes in the projects of DEUTSCHLAND.Immobilien. And that means this is the, let's say, the development of the project level, meaning to be more precise there, when we buy some land and for example start with the project, and then the costs we have for the land and for the project itself before it will be sold is the development of the change in inventory. And therefore, the -- let's say, the worth of the project has increased by EUR 10 million.
But I mean, it has been only a 12.3% for the first 9 months. Those -- this Q now that there is no -- that there was no lockdown anymore that you had such a strong Q3, so some catch-up effects or?
This is, let's say, it's -- what I said is when the development of the changes, when it's not -- my example was before it is sold. On the other side, when we start selling this, this value will decrease. And therefore, let's say, it's a mixture of the growth of some projects on one side and on the other side as a reduction, the sale out of this project. And therefore, there can be a quite successful year or quite a successful quarter and the value there in this line will not change. Therefore, I think it's a little bit -- this just as a first answer to this question.The next question also is an interesting one outlook. As we said, let's say, overall, I think the first part of your question was to give a little bit more details to what we mean with our outlook and what that we expect our results to be above the corridor that I think was the first part of the question. And we said we expect something like significant above our question and in our terms significant is 10% and more to this. And old-age provision, I think was the question was if we will see the same revenues as the year before, and I think we will see more than the year before revenues in old-age provision. I hope these were your questions on the outlook.Before I come to the next, does it answer your questions on the outlook?
Yes.
Okay. And non-life, yes, it was quite strong in the first month. At the moment or let's say starting from the positive part, why was it that strong? There's, first, one small effect included. We had the acquisition of FOM and the results of FOM of EUR 5.3 million in the second quarter and in the third quarter are something like, let's say, one-off effect. And obviously, this effect increases the comparison to the year before. This is number one. And number two, as every year, we see, let's say, our increase, which is, let's say, the normal range between 4% to 6%. And there were in some areas, some, let's say, positive developments. On the other side, also mentioning this at the moment, we see in this area, at least operative, quite an interesting load of work because especially in our DOMCURA segment, where we have many houses insured or we -- finally not we, but we managed the insurance for many houses. You can imagine that after the tragedy we saw, especially in ATA, that there are many, many things to do. And we have much more workload and much more damages to manage than a normal year, which, let's say, hinders a little bit the development and the longer business. And therefore, that was one of the reason why we reduced, let's say, also our outlook for non-life insurance.
Our next question is [indiscernible].
I have 2 questions, please. Firstly, could you comment on the start of your financial consulting segment into Q4? And secondly, on the same segment, could you explain the quarter-on-quarter increase in other operating expenses in Q3? These are my questions.
Yes. , how is the segment finanzberatung consult developing, in the beginning of the fourth quarter, we are always hesitating with the question on this, but let's say, we have seen on the revenue side, a quite interesting increase in the first 9 months. And it's -- there is no negative development seen in the first phase of the final quarter. This is question number one. And the other income quarter-by-quarter, to be quite honest, I'm hesitating there a little bit if I see the correct results because I'm wondering because overall, the changes there are relatively small.
Expenses, I think.
Did you say other revenues or other expenses? Sorry.
Other operating expenses.
Other operating expenses. Okay, a good point. The main issue there on other operating expenses is that -- and the question on Olivier Calvet is topics concerning, let's say, cost management for '22. I explained that we are in the course of a quite huge IT project, which will reduce our IT costs next year by a quite significant number. And due to this IT strategy, as we call it, we see higher IT costs this year due to the fact that we are at the moment in the phase to operate 2 systems in parallel.
[Operator Instructions] For the moment, there are no further questions and so I hand it back to Andreas Herzog.
Well, thank you, operator. Ladies and gentlemen, thank you for your questions and thank you for joining our call. For further questions, please do not hesitate to contact me or our IR team. And so take care and goodbye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.