Good day and welcome to the MLP results call for the second quarter 2022. Today's conference is being recorded. At this time, I'd like to turn the call over to Andreas Allar. Please go ahead.
Thank you, operator. Ladies and gentlemen, welcome to our conference call. This morning, the MLP Group published quite strong results for the first six months of the year. With me today is our CFO, Reinhard Loose, who will guide you through our numbers, and of course, will be available for your questions afterwards. Please go ahead, Reinhard.
Thank you, Andreas, and good afternoon, ladies and gentlemen. The MLP Group remains on track. Following an excellent start of the first quarter, we underpinned our great stability in the second quarter. This was achieved despite operating in a market environment that was clearly subdued, particularly due to the war in Ukraine and the high level of inflation. We were able to increase our revenue to new record levels, both in the first six months and also in the second quarter. The MLP Group also enjoyed a significant increase in earnings before interest and taxes after the first six months of the year. We achieved this thanks to excellent earnings in the first quarter and stable development in the second. We benefited not only from our pronounced proximity to our clients, but also from our demand-oriented and highly diversified positioning.
Although external factors, which we cannot influence, are likely to intensify in the coming months, it is important to remember that what we can directly control as a company, we manage quite well. We generally look forward to the second half of the year with a sense of confidence, while obviously remaining highly vigilant. We are also keeping a close eye on our midterm planning. EBIT recorded by the MLP Group is set to reach EUR 100 million-EUR 110 million in the fiscal year 2025, with more than EUR 1.1 billion in sales revenue. The fact that we generate added value for our clients, and therefore also for our company, through various perspectives and areas of expertise, is also becoming increasingly important.
At the same time, we are continuing to invest extensively in our future and are therefore continuously strengthening our basis for our planned medium-term rise in earnings. You can find an overview on revenue development in slide 5 of the presentation. In the period from January to June 2022, MLP increased total revenue by 12% to a new record level of EUR 472.6 million. MLP was also able to increase total revenue in the second quarter. Commission income, in other words, revenue from commission and fees, is at EUR 427.7 million in the first half year. This shows how effective our consultants have been delivering our service commitment of being the dialogue partner for all financial matters for the clients. At the same time, these business figures reflect how successfully we now also serve other customer groups in the MLP Group.
We have been working with many of them for years, and we are very aware of the trust they place in us. The next slide, once again, shows our successful development without Old-a ge provision. Commission income, including real estate development, is reported in a long-term comparison. More than ever before, we can see just how we have driven the comprehensive diversification of our revenue base in the last few years. Indeed, it is precisely this diversification that grants us the pronounced stability the MLP Group currently enjoys, which becomes particularly important when parts of certain markets are in decline. We were able to achieve average annual growth of around 10% in these newly established lines of business, of those significantly expanded since 2005.
A glance at the individual consulting field shows that we were able to record particularly strong percentage growth in real estate in the first half of 2022. Revenue rose by 126% to EUR 50.4 million here. This can, in particular, be attributed to the successful project business at MLP's subsidiaries in the Deutschland.Immobilien segment. In addition, real estate brokerage, particularly by MLP consultants, made a valuable contribution to this pleasing development. The group achieved strong growth with an increase of 20% in non-life insurance. The first time consolidation of companies in the Industrial Broker segment in the first quarter also had an effect here. RVM has been fully consolidated since the second quarter of 2021. DOMCURA and MLP's Private Client business also displayed positive developments in the first half of 2022.
In the loans and Mortgages business, MLP recorded growth of 8% for the first six months of the year. While the latest strong increase in financing interest rates is causing some consumers in the market to refrain from their consideration of acquiring real estate, MLP is benefiting from the fact that our clients interested in purchasing real estate have above average incomes and wealth. Health insurance revenue remained constant in the first half of the year, while Old-a ge provision revenue declined slightly from EUR 88.2 million to EUR 86.3 million.
This can be attributed to a significant slowdown in the private Old-a ge provision market from April to June. In addition, having recorded growth in new business and Occupational pension provision in the first quarter of 2022, also MLP observed some reservation among companies in the period from April to June in terms of expanding their commitments in this field. This can be quite clearly attributed to uncertainties that numerous companies are currently facing, in particular, due to the natural gas crisis, ongoing disruptions to supply chains, as well as high inflation. Overall, we expect the positive trend in Occupational pension provision to continue. In terms of revenue development and Wealth management, we should first look at the capital markets, which, as you know, are being impacted by global crisis and tensions.
Uncertainty about the pandemic and earnings performance at companies, as well as the anticipated energy crisis, are shaping the overall mood. Yet, MLP was able to perform more than solidly. Despite the challenging situation and a significant decline in performance fees associated with this, the MLP Group was able to achieve slight growth in the Wealth management in the first six months. This also shows a strong footing Wealth management in our group and how much trust our clients place in our expertise, both at FERI and in MLP's Private Client business. In terms of revenue, this means a very slight increase in the first half year of it to EUR 161.4 million, whereby revenue in the second quarter of 2022 was, as expected, slightly down over the same period in the previous year.
As already mentioned, it is important to note the following year. Due to negative capital market developments in the second quarter of 2022, no major performance fees were collected in this period. This is in contrast to a significant revenue contribution in the same period of the previous year as a result of a highly positive development on capital markets. Indeed, these fees were already significantly lower in Q1 2022 than in the same quarter of the previous year. Successfully compensating for this is indeed a strong sign of the stability and strength of MLP. The success of our client support in Wealth management is also reflected in further net cash inflows at FERI and MLP Banking. In the MLP Group, we manage EUR 54.2 billion as of the 30th of June 2022.
Following a slight decline over the record level on the thirty-first of March 2022, we still remain significantly above the comparative figure from the same period in the previous year. This slide also shows how effectively the MLP Group has already been able to increase its assets under management in both the medium and long term. Indeed, this figure stood at just EUR 11.4 billion in 2007 after the first time consolidation of FERI. The fact that the non-life insurance portfolios managed by the MLP Group have once again seen an increase is also pleasing. At EUR 620.1 million as of the thirtieth of June 2022, we are operating at the level of a medium-sized non-life insurer, and portfolios of this kind obviously also further increase our stability.
You can find the current income statement on page nine. At EUR 44.1 billion, MLP succeeded in considerably increasing its EBIT in the first six months of the year, despite the challenging market conditions. This was driven primarily by the strong increase in EBIT to EUR 34.6 million in the first quarter of 2022. At EUR 9.5 million, Q2 EBIT remains stable even in subdued market conditions. Alongside successful operational development in the first half of the year, particularly in real estate, the anticipated first ever profit contribution from the Industrial Broker segment in the first quarter also took effect. MLP had established the Industrial Broker segment with the acquisition of RVM in early 2021, as well as with further subsequent acquisitions. Net profit for the group rose from EUR 21.2 million to EUR 31 million in the first six months.
The next slide shows your balance sheet. As of the balance sheet date, shareholders' equity rose slightly from EUR 496.2 million to EUR 504.1 million. The core capital ratio was 18.2% on the reporting date, meaning that we remain well-positioned. We are anticipating a comparable level over the course of the year. Consultants in the MLP Group were serving 567,200 family clients as of thirtieth of June. The gross number of newly acquired family clients was 8,700. We also served 25,000 corporate and institutional clients. The number of consultants in the MLP Group as of the thirtieth of June was 2,042. Through our continued business success, which I have described to you today, our transformation to the new MLP is becoming ever clearer.
Thanks to our further optimized setup, we do not only meet the growing demands of modern financial consulting, but are actually front runners in many respects. This applies in equal measure to serving private and corporate clients. After all, both of these require very well-qualified personal client consultants. Together with modern technology and expert support from back office and group companies. Professional financial consulting is therefore becoming increasingly collaborative, enabling clients to receive a tailored service offering. To this end, the MLP Group has expanded existing business areas and pushed forward into others in which it had previously not enjoyed any presence. Each subsidiary is a strong brand in its own business area, which not only offers great potential in itself, but also increases stability within the group. We have worked hard to secure this strategic advantage, which really pays off in eventful times such as these.
We are also investing a great deal of time and energy in driving forward the interaction of the diverse competencies within the group. Digitalization is playing an increasingly important part here, particularly in terms of processes that run in the background. Their importance for the client experience and also in securing client loyalty should not be underestimated. We have done a lot throughout the group to make this happen, and our steps on the road to the new MLP are already paying off. Indeed, they further improve the way in which clients perceive our consulting services, while at the same time boosting profitability. What is now taking effect throughout the group applies all the more in MLP's Private Client business. Personal consulting in conjunction with complementary digital offerings and services is more than ever the key to long-term client satisfaction.
This is the reason why we invest heavily in the qualification of our consultants year after year, as well as developing and driving forward digital solutions. One example of the latter is MLP Choice, which I already mentioned as an example on other occasions. MLP Choice is all about expanding our client-centric approach. This means that those customers who are not in close contact with consultants are to be supported centrally on the topics that are relevant to them. This happens situation specifically and mostly digital. The main focus here is on the insurance sector. This brings me to our forecast. We have also reaffirmed our assessment of revenue performance in individual consulting fields after the first six months of the year.
We are still anticipating a slight increase in revenue for the year in the Old-age provision business, although market-related challenges already started in the second quarter could continue in the second half of the year. However, the fourth quarter is traditionally very strong in our business model, which provides us with a possible leverage for further Old-age provision revenue development. Following a stable first half of the year, we are also still anticipating a slight downward trend in Wealth management for the year as a whole, especially since the situation of the capital markets appears to remain challenging, and we had also benefited greatly from high performance fees into the previous year.
Overall, we still expect further growth in new business in the group and an increase in recurring revenues in various consulting fees to largely compensate for the decline in performance fees in Wealth management that has already been recorded and is still to be expected. At the same time, we are continuing to focus on cost efficiency throughout the group. Despite further increased risk in the market, we are still aiming to achieve an EBIT of between EUR 75 million and EUR 85 million for the whole year of 2022. However, we are also keeping a very close eye on the overall situation to determine whether uncertainties resulting from the risk aspects mentioned earlier are likely to increase further, most importantly with regard to energy.
For companies in this country is to be hoped that despite the ongoing efforts to adjust to gas shortages, there will not be a complete halt to supply from Russia. Regarding another key risk aspect, inflation, we are now seeing signals that the peak may soon be passed. Based on the forecast for the current year, we once again confirm our medium-term planning. The increase in EBIT by the end of 2025 is set to EUR 100 million-EUR 110 million, with sales revenue in excess of EUR 1.1 billion in the same year. This planning essentially rests on three core strategic success factors that I've already addressed in detail over the last few months and will therefore just briefly summarize here.
These are a further increase in Assets Under Management in the group, sustainable growth across all consulting fields, and continued expansion of our real estate business despite operating in tougher framework conditions. Ladies and gentlemen, please now allow me to move on to the summary. Firstly, the first half of the year, we recorded EBIT growth and were also able to further increase sales revenue quite significantly despite operating in a market environment that already showed signs of slowdown. More than ever before, the stable positioning of the MLP Group represents the basis for our positive and sustainable earnings performance. Secondly, the earnings recorded represent an excellent starting position for the second half of the year, which we generally look forward to with a sense of confidence. At the same time, however, we are remaining highly vigilant with regard to further increasing risks.
Thirdly, we also remain focused on our medium-term planning for 2025, which we have reaffirmed here today. Our goal is to take the MLP Group to the next level in terms of revenue and earnings, and we have already started this period of growth. Many thanks for your time. I'm now happy to take your questions.
If you would like to ask a question at this time, please signal by pressing star one on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you'd like to ask a question. We will pause for just a moment to allow everyone an opportunity to signal. Our first question will come from Philipp Hässler with Pareto.
Yes. Hello, Philipp Hässler from Pareto. I have three questions, please. I apologize in advance if I ask something which you have covered during your presentation because I had technical problems dialing into the call, so I was a few minutes late. Let's start with the net flows. Please could you give us the net flows for Q2 or H1, as you probably prefer to do? On the inflation, you probably suffer like all other companies from higher personnel costs and non-personnel costs. I would like to get a feeling of to what extent you are able to also generate higher revenues or is there not much potential for you to pass on the high inflation to your customers?
Last but not least, you probably have covered this but, as I said, I was late in the call. On the real estate brokerage business, fees were very, very strong in Q2. Was there a one-off or was there a special big deal? Maybe you could give us an outlook for H2 and also comment on how your customers see this business. Is the demand for real estate properties still high, or has it come down somewhat? Thank you.
Hello, Mr. Hässler . Just of course, I covered all the questions in the first seconds. No, that's a joke. No, no. I start with your first question, the net flows. Overall for the assets under management, we had around EUR 3.9 billion of gross inflows in the first half of the year. As you expected, this is what I prefer to answer. We had outflows of EUR 1.7 billion in the first six months. You will calculate the performance, which, without surprise, was negative in the first six months and -EUR 4.5 billion for the whole portfolio. I go to question number three. Inflation is, I think, the most difficult one. Real estate.
Yes, we had a high increase, 126% increase, in revenues in the first six months. Please keep in mind there are two parts in it. There are the part of brokerage and the part of development. Brokerage is that what we do now for eight years. We started in 2014 with the brokerage, and after the acquisition of Deutschland.Immobilien, we also started with development of some projects, to let's say to give us a better reach to some projects, especially in the area of housing for senior people. Therefore, in the first six months, we had an extremely high increase in revenues in the development area.
The brokerage part went up by around 24%. Therefore there was no special effect. You might remember that during the last calls from time to time we had the question, when do we start with the development? I said there are some delays in the development of the projects. Now the projects start running and therefore the revenues went up in the first half of the year and we expect that they also will continue to be quite high in the next six months. You didn't ask this, but perhaps I should add one thing. I said the brokerage still went up around 24% in the first six months.
Yes, we see the increase went down a little bit. We still see an increase, but nevertheless with the interest situation we have right now, the demand is not as high as it was 6-12 months ago, but still with an increase towards last year. Now I hope this has answered. No, the inflation. I didn't want to answer this one.
In inflation, we definitely also see on the cost side, on the HR cost side, until now it's not that much, but we see that it's going up definitely on other costs. We see prices rising and parts of our business model especially, in the brokerage, in the insurance sector, there our possibility to increase margin itself is extremely limited. Therefore, we have to look for compensation in the increase overall in the volume. Therefore, it's for us a little bit more difficult to increase prices there than someone who is really, let's say, producing things. This is something which is on pressure, therefore, we have to continue on our growth path.
In the asset management area, it's probably the same. It's very hard to increase margins for you.
Yeah. Yeah. It's more or less, more or less the same.
I didn't catch the number. The net outflows for H1 were EUR 4.5 billion.
No. The negative performance was EUR 4.5 billion.
Okay.
The outflow was EUR 1.7. Inflow was EUR 3 point-
The net outflow.
Sorry. The gross outflow was EUR 1.7. The gross inflow was EUR 3.8.
Okay. The EUR 1.2 is then the net outflow.
EUR 2.1. The other way around.
Yeah.
EUR 2.1. The net inflow is EUR 2.1.
Hey, you're the CFO. You are much better in math than me.
If I see your calculation slides, I'm not quite sure about that, but thank you.
Okay. Thank you very much.
You're welcome.
Our next question will come from Fabian Lüdiger with Kepler.
Yes. Thank you very much. Good afternoon, everybody. I have two questions. The first one is on the Wealth management segment. Do you still anticipate a positive high single-digit million EUR contribution from performance fees to your 2022 EBIT as H2 could be similar to Q2? The second question is on the Industrial Broker segment. What are the current trends and should we expect other small bolt-on deals in this business in H2? Thank you.
Hi, Fabian. Thanks for your questions. Concerning performance within the Wealth management, the performance fee. End of last year, we announced that we see a single-digit million EUR amount in our planning as what we expect for the whole year 2022 as performance fees. Now we have around EUR 5 million in the first six months as performance fees, especially in the first quarter, obviously. Yes, definitely it will be difficult in the second part of the year. Overall, we all see it right now, the trend at the moment is not totally negative, to say it this way. Therefore, perhaps we see some performance fees. On the other side, we will see much less performance fees than we saw in last year.
Just to keep again in our minds, we had more than EUR 60 million performance fee for the whole year last year. Definitely, we will see a single-digit million EUR amount, and that will be the huge difference. Our task is, and at the moment it works quite well, to balance this with the increase in other areas. On the Industrial Broker segment, yes, now, after the first six months, we see there an EBIT of more than EUR 6 million. Therefore a positive part. Please keep in mind that the positive effect is in the first quarter and in the following quarters there will be normally a slight negative effect.
Therefore, there will be no positive surprises in the next months. This was also part of our planning. We announced and therefore we still stick to this, that we plan to grow this segment. We are looking and also in discussions with other companies, if we can or could acquire them. Obviously we will not promise any acquisitions, neither in the next months, nor overall. We are in discussions and I would assume that sooner or later we will see another acquisition there. Did this answer your questions?
Yes. Thank you very much.
Yeah, you're welcome.
Ladies and gentlemen, once again, star one if you'd like to ask a question. We will now hear from Jochen Schmitt with Metzler.
Thank you. Jochen Schmitt speaking. Good afternoon. Sorry, I was also late in the call, but I guess you have not answered my questions yet. Firstly, on Non-Life Insurance brokerage regarding inflation, do you see some clients actively asking for higher insurance cover in existing policies in certain lines of business, like for example, home insurance? And secondly, any comment on new Mortgage loan business volumes, since beginning of July would be fine. These are my questions. Thank you.
Hello, Mr. Schmitt. No, I don't repeat the joke and definitely I haven't answered the questions in the first seconds, therefore. First question, non-life insurance. This is something where we can now spend a lot of time in. In the Industrial Broker segment, in the majority of the cases, the coverage is linked to, for example, revenues of the companies. And therefore, if revenues goes up, then the premium also goes up. There were some questions concerning the different coverages, but I wouldn't call this at the moment a big wave. But what we will see, and this perhaps also not only in general for MLP as a company, but also for you personally as someone who also insures your house.
What we see at the moment is something which never happened before. The overall there is something like a like an expert committee who gives to the insurance companies an advice how the costs and how the premium of Non-Life Insurance, especially, for example, in the housing area, should increase. In the last 70 years, the overall advice was to increase the premium between 0.5% up to 4%. In this year, the advice is to increase the premium by 15%. Obviously that is not sure that all insurance companies will act like this, but nevertheless, what we will see in the next year is an increase in Non-Life Insurance premiums.
As a, let's say, as a normal people, I would say, that's definitely another sign of inflation. As a broker, as we are, I see this with a positive and with a negative part. The positive part definitely is, and this goes a little bit to the question Mr. Hässler had before, concerning inflation. We can't increase our margin, but if the premium in non-life insurance will increase that much, also our overall part and our overall share will increase, obviously. Therefore, this is also for us as a company, some positive sign as long as the companies and everyone, all the customers can and are willing to pay this insurance premium.
This was a little bit longer than the answer, but I thought it could be interesting.
Yes, thank you. On new Mortgage loan business volumes?
Sorry. Yeah. I answered that much on the first part. Mortgage volume, definitely, as in the whole market, there was a very high demand in the first month, and this demand is going down with the higher interest rate. During the last weeks also we see a decline in demand there. I think like the whole market.
Thank you.
You're welcome.
We have no further questions at this time.
If there really are no further questions, I would like to thank you for participating in our call. If further questions might arise afterwards, please do not hesitate to contact the IR team. Have a good day and goodbye.
Thank you. Bye-bye.