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Metrovacesa SA reported its earnings for the second quarter of 2025, revealing a mixed financial performance with robust sales figures but a net loss. The company’s stock declined by 1.42% in pre-market trading following the announcement. According to InvestingPro analysis, Metrovacesa is currently undervalued, with a GOOD overall financial health score. Despite the challenges, Metrovacesa maintained its full-year guidance and outlined strategic initiatives to drive future growth.
Key Takeaways
- Metrovacesa reported total revenues of €133 million for Q2 2025.
- The company delivered 423 units and presold 834 units in the first half of 2025.
- Metrovacesa’s stock price dropped by 1.42% in pre-market trading.
- The company confirmed its full-year 2025 guidance, targeting a €150 million operating cash flow.
- A significant sales backlog of €1.3 billion was highlighted.
Company Performance
Metrovacesa’s performance in Q2 2025 was characterized by strong sales and a substantial sales backlog, despite reporting a recurring pre-tax loss of €3.5 million. The company delivered 423 units and presold 834 units, reflecting robust demand in the residential market. However, the recurring pre-tax loss indicates ongoing financial challenges. The company remains optimistic, confirming its full-year guidance and focusing on strategic land acquisitions and project developments.
Financial Highlights
- Revenue: €133 million
- Gross development margin: 22%
- EBITDA: €5 million
- Recurring pre-tax profit: -€3.5 million
- Free cash flow: >€15 million
- Net debt: Approximately €400 million
Outlook & Guidance
Metrovacesa has confirmed its full-year 2025 guidance, projecting an operating cash flow of €150 million and a gross margin of 24-25%. The company expects a positive net profit higher than the previous year, driven by strong market demand and strategic initiatives. Notable for investors, Metrovacesa offers a significant 7.45% dividend yield, making it an attractive income investment. The company is also continuing its land acquisition strategy to support future growth.
Executive Commentary
Jorge Pere de Leca, CEO, emphasized the company’s strong market position and demand foundations, stating, "We continue to see solid foundations on demand." He also noted a strategic focus on prioritizing price over volume. Financial Director Borja Tejada highlighted the company’s competitive financing access, saying, "We have very good access to financing at a very competitive price."
Risks and Challenges
- Potential slowdown in house price growth in certain locations could impact future revenues.
- The recurring pre-tax loss indicates financial challenges that need addressing.
- High net debt levels could pose a risk if market conditions worsen.
- The ongoing need for land acquisitions requires significant capital investment.
- Economic uncertainties and changes in interest rates could affect market demand.
Q&A
During the earnings call, analysts inquired about Metrovacesa’s land sales strategy. The company expects over €70 million in land sales to be formalized by year-end, focusing on commercial land sales for flex living and alternative uses. Additionally, there is increasing interest in developments in smaller cities, which could diversify Metrovacesa’s market presence.
Metrovacesa’s Q2 2025 earnings report reflects a company navigating challenges while leveraging strong market demand and strategic initiatives to drive future growth. For comprehensive analysis of Metrovacesa’s performance and future prospects, including detailed valuation metrics and growth indicators, visit InvestingPro, where you’ll find expert insights and the complete Pro Research Report.
Full transcript - Metrovacesa SA (MVC) Q2 2025:
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Hello. Good morning, and welcome to the first Semester twenty twenty five webcast from Metro Basesa. My name is Juan Carlos Calvo. I am Director of Corporate Development and Investor Relations. And as usual, we have with us Jorge Pere de Leca, CEO of Metro Basesa and Borja Tejada, Financial Director.
We are going to present an overview of our operating activity and the financial results for the first semester of the year 2025. The slides of this presentation have been released to the market earlier this morning, and they are available through the CNMB website and in the company website. We have also sent it by email to our usual distribution list for analysts and investors. At the end of this presentation, there will be a question and answer session. If you wish to ask a question via conference call, you can register by pressing 5 in your telephone keypad at any time.
If you are participating via webcast, you can type your question directly in the webcast platform, and we will read it out. Now I hand it over to our CEO to stand to start the presentation. Please, Jorge.
Jorge Pere de Leca, CEO, Metro Basesa: Thank you, Juan Carlos, and welcome everyone to our midyear twenty twenty five results presentation. I will start in page number five with some three straightforward highlights. And first one regarding the market, we are with good headwind sorry, headwinds tailwinds in a market with growing demand. Our operational activity is going as planned, and that will basically mean, that we reiterate our guidance for the full year 2025. In terms of demand, as you are probably all aware, the transaction volume continues to increase quarter over quarter, and we are reaching record levels now of transactions between first home new homes and second homes.
And this strong demand is also being supported by growing households’ wealth with a 5% average annual growth since 2014. Our revenues or going to our operational activity, our revenues for this semester have been €133,000,000 with four twenty three units delivered and a gross margin of 22%, and I will elaborate on that a little bit more. Our presales figure is of €310,000,000 with eight thirty four units and an average selling price of 371,000. So up to 14% increase year on year, and we are seeing that figure growth coupled or fueled by the market demand and the market situation. Our sales backlogs are well over $1,000,000,000 now, 1,300,000,000.0, which is an increase of 16% versus December with a total of close to 3,700 units sold with an average price of again close to EUR 370,000 per unit.
We reiterate our guidance for the year with a higher concentration of deliveries in the second half of the year as it’s usual in the industry. And this is well supported by a 96% coverage ratio sold units in the year and Jose will detail a little bit later. And again, I reiterate that our full year guidance remains unchanged. Carlos, I hand it back to you just to give a brief overview of the market again.
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Yes, thank you. Just a few stats on the sector. We see that the market in in in the last few months has continued to to perform well. We’ve seen an acceleration in house prices, now growing at 12% year on year. This is the seventh quarter consecutively with an acceleration in the increase of house prices.
And also, have seen an acceleration in the volume of transactions. You can see that in the chart. We are now close to record levels. In the last twelve months, the number of transactions has been close to 700,000. This is similar to the figures we had in the year 02/2008.
And and and we have actually seen also some acceleration in the, volume of new, constructed, houses, which continues to be a a small percentage of the total transactions. But that reflects that, when the volume of new construction is is is growing, this is well absorbed, by the market. The this demand and prices is well supported by the finances of households. And you can see the the third chart on the on the right, where we can see the the growing trend of the wealth of the families, be it real estate plus financial assets, whereas the financial debts by families has been stable or slightly going down. So this is very much a a dual market where, obviously, there are some people with difficulties to access housing, when when salaries are growing more slowly than house prices.
But on the other hand, there is a a significant portion of the of the population or the or the or the market where their their finances are well supported, and this is supporting sufficiently the the housing demand. Obviously, going forward, we can think that I mean, there are some locations where prices are already touching some relatively stretched ratios in terms of FFR rates. That could indicate that maybe in the future, we could see some slowdown in the rate of growth of prices and and volumes, but, no sign of, of weakness, in fact, all the contrary in the recent data in the market. Back to Jorge.
Jorge Pere de Leca, CEO, Metro Basesa: Yes. Thank you, Juan Carlos. Going to Page number nine, our operational activity. We see that our pipeline continues to grow and with a high visibility supporting our you know, target figure of 2,000 units per year of run rate. We have a sales backlog of 3,000 close to 3,700 units.
And as I mentioned before, with with an average selling price that keeps growing, and it stands now at €365,000 per house. Of these sales backlog, 83% is actually formalized in private contracts with one payments and the rest being reservations. We have 4,400 units under construction with close to 700 units that we have started in the second sorry, in the first half of the year, and again, with our run rate of around 2,000 units per year. And then in commercialization, we are close to 6,100 units, of which 61% is actually sold, seven fifteen units launched to the market in the first half, and, you know, a potential revenue of 2,300,000,000.0 at an ASP of close to EUR 3 and 80,000 per unit. So you can really see the progression of EUR $3.65 on the sales backlog, on the new sales, $3.71, and then finally in commercialization close to three eighty.
So that represents or implies that we are following the trend in the market of increasing prices. The commercialization mix Seville is 23%. This is mainly due to Palma Saltas, Isla Natura being our star project in the last couple of years. And this will this mix will eventually change, and we will have an increase going forward in Madrid, Barcelona, Valencia or or all our non fully permitted land is coming into commercialization in the next couple of years. In terms of presales, as I mentioned at the beginning, we’ve sold we’ve presold eight thirty four units in the two quarters, and we are prioritizing price over volume.
Some of you may think, well, is this a low figure? Actually, the way I view it is that this is good news. And it’s probably even, I would say, maybe a higher high figure because if you think about the coverage ratio that we have right now, we are in a position that we need to maximize where are going to maximize margin rather than selling. We need to sell 4% of units for the remaining part of the year, assuming that we deliver between seventeen fifty, 2,000. Let’s take the higher part of the range.
If we were to deliver 2,000, we would need to sell 4% of that, which is 80 units in the remaining six months to deliver the targeted figure. Even thinking about deliveries of 2026 and 2027, I would say that we are now at 80% of coverage of 2026. So I would say we really don’t need to sell any more units of the 2026 deliveries. And of 2027, if we were to finish the year with, let’s say, 50% coverage, that would mean a 10% over 2,000 is 200 units. So if I add up all that, we really need to manage the sales appropriately because we’re not in a hurry to sell units here.
In terms of deliveries, so we have delivered four twenty three units and we will comply with our full year guidance, which is to be in a figure in the range of what we delivered last year and representing together with land sales $150,000,000 cash flow generation. If I take this just to give more visibility, these four twenty three units, we can add another seven fifty that are already with the works finished and sold. And on top of that, we will have final work certificate of between 800 to 900 units in the within the third quarter that are subject to be delivered in the in the year as well. So, you know, good coverage in terms of construction as well in order to meet to meet the target. And again, with with a very high visibility, as I mentioned before, for the coming years, now 80% in 2026, which is already a figure that probably 80% is good enough or even high for the end of the year to be there and 40% in 2027.
So quite comfortable in terms of coverage for the deliveries, not only this year, but in the coming years as well. In terms of land activity, moving on to Page 12. In the P and L revenues, you will just see $1,800,000 in P the and L in this first half of the year. However, the target for the remaining part of the year is to have a figure that is much, much higher than that. We have and this is supported by a backlog of binding contracts already signed of EUR 100,000,000, part of which will actually materialize or be notarized and therefore show up in the P and L in the second half of the year.
And then also, some other good pipeline on the works that will mean additional private contracts in the year and then notarizations in 2026 and 2027. In terms of land acquisition, we continue with what we call our top up strategy, which is in combination of the fully permitted land, but then plus the non fully permitted that becomes fully permitted and subject to launch and a few additional 100 units per year of purchases with, you know, in order to reach that run rate of around 2,000 units per year. We’ve purchased so far three sixty units with a committed investment of around 38,000,000. We’ve purchased units in Guadalajara in Madrid that was publicly announced, also in Valencia and at the end, you know, in in areas where demand is strong and where we see margins that are, you know, gross margins that are in within or higher than our targeted figure of being closer to 25% rather than 20%. In terms of our commercial portfolio, page number 13, we continue full steam ahead with our tool developments in ORIA Innovation Campus, the student residence and the flex living that we are co developing with with VITA with the first student residence with 585 rooms being on track to be delivered in 2026, 52% work in progress right now.
And the flex living almost at what we call Cotaferos or ground level and then to be delivered in 2027. The two additional projected buildings, the 40,000 square meters, which could be used for offices or flex living or PVSA, it’s worth one of 6,300 square meters. We have ongoing conversations with interested partner partners or parties, and we will announce something probably soon on that regards. In terms of of selling land activity, I think, you know, the of of the 100,000,000 signed in private contracts in total land sales, 54,000,000 of that is actually commercial land. What I would say is that the added flexibility towards office use that has been possible in some cases because the urbanistic parameters already allow it or it might be in other cases.
The regional regional, let’s say, guide regional urbanistic flexibility has been brought into place. We have been we are having mainly conversations in that office land use around flex living or PBSA, and that’s why we are seeing increased liquidity for that commercial portfolio. Finally, in the Porto San Board office, where we have our JV with Tischmann Spire in Las Tallas in Madrid, We’ve reached 75% occupancy rate, and we are in advanced conversations for an additional twelve percent take up. So basically, very close to reaching full capacity of the building in the coming months. So again, good news.
Moving on to Page number 14, I mean, this is reflects our ESG strategy. Let me probably emphasize on the environment part that we are 100% of our launches in the last year and then going forward, our AA energy efficiency and also with a goal of having a primary energy demand that is at least 10% below nearly zero energy buildings as the best environmental practices in the market guide us towards. We are on top of that measuring in the activity or the carbon footprint or the activity life cycle in 100% of our buildings. And we are basically complying or fact even going higher than the minimum legal requirements in waste management control processes and recycling of our waste in our construction works. In terms of governance, I would also like to highlight that according to the S and P Global Sustainability Index, we were rated at as being 90 in the top 93 percentile last year according to their audit of our ESG policy.
And with that, I hand it over to Jorge, our CFO,
Borja Tejada, Financial Director, Metro Basesa: for the financial overview. Thank you, Jorge, and good morning, everyone. Concerning our profit and loss account, some key figures, 133,000,000 total revenues, an average selling price of €110,000 per unit. Gross development margin up to 22% according our guideline of low 20s, even though for the year end, this percentage will be higher. In terms of EBITDA, 5,000,000 and recurring pretax profit minus €3,500,000 With reference to our free cash flow, it’s always more than 15,000,000 of gross operating cash flow as the end of as of the June.
Well on track for reaching our guide our guided target for the operating cash flow at the end of the year. In terms of net debt, the company has very good access to financing as always at a very competitive price, 4.8% as average, five 15.9% of loan to value, a comfortable ratio in line with the sector average and with our reference of 15% to 20%. Nevertheless, increasing in order to optimize the capital structure of the company and the higher CapEx in ongoing developments. €440,000,000 gross debt and, a little bit more than 400,000,000 in net. Relevant to mention that the company has not any relevant, maturity up to 2029.
Finally, to conclude and about our asset appraisal, euros $256,000,000,000 of JV, out of which 85% represent our residential portfolio and 15% the commercial one. Positive growth of 4.1% like for like compared with December 2024 with an increase of more than 5% in our residential portfolio and a slight decrease of 2% in Commercial One. In terms of NAV, 13.27 per share after the distribution of €0.46 of dividends in May. Ex dividends would have represented an increase of 3.6. Now I will hand over Jorge with closing remarks.
Jorge Pere de Leca, CEO, Metro Basesa: Thank you, Borja. Moving to Page number 21 and then to conclusions or closing remarks, I would say that we still continue to see solid foundations on demand. We do, as I mentioned, have growing pipeline and visibility supporting our 2,000 unit run rate. And finally, I would again reemphasize that we confirm our guidance for the full year 2025 with 150,000,000 operating cash flow and supported even though that the semester has we would consider it as a transition semester. The supporting figures in terms of units sold or presold in terms of construction finished finishes within within time to be delivered.
And finally, a solid pipeline of land sales that will be finalized or notarized in the year, we are comfortable with the guidance. Thank you very much.
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Thank you, Jorge. We are now ready to start the question and answer session. We will start taking the questions from our participants in the conference call. Questions. Okay.
First question for a conference call is from Ignacio Dominguez from JB Capital. Ignacio, please go ahead.
Ignacio Dominguez, Analyst, JB Capital: Good morning. Thank you for the presentation and for taking our questions. I have two on land sales. Firstly, out of the €99,000,000 binding contracts signed for land sales, how much do you expect to be formalized by year end? And my second question is, given the 10% reported gross margin on land sales in the first half, what margin can we expect for the land sales expected to be formalized in the second half?
Thank you very much.
Jorge Pere de Leca, CEO, Metro Basesa: Ignacio, thanks. This is Jorge. Thank you for the question. On the first one, I would say north of 70000000 Dollars And the second one, if you can repeat it because I didn’t catch it.
Ignacio Dominguez, Analyst, JB Capital: Yes. Thank you. My second question is that given the 10% reported gross margin on land sales in the first half, what margin can we expect for the land sales expected to be formalized in the second half?
Jorge Pere de Leca, CEO, Metro Basesa: I would say, you know, we don’t we don’t normally give that figure, but I would say, you know, between 05%.
Ignacio Dominguez, Analyst, JB Capital: Okay. Thank you very much. You’re welcome.
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Okay. We don’t have more questions from the audio conference call. We now read some questions from the webcast. We have a question from an investor asking about what is the expectation about gross margin for the year 2025 considering the 22% reported in the first semester that is similar to the 22% reported in the full year 2024. So what is your expectation for the full year?
Jorge Pere de Leca, CEO, Metro Basesa: So I think we would reiterate our guidance from the beginning of the year. That is we are going to be closer to 20% to the mid-20s, so 25% than in the middle of the range. So I would say, definitely more than 22%. And let’s say that 24% would be a reasonable figure. And then it will you know, at the end, we obviously, you know, 96% of the units are sold.
So it will just depend on, you know, the mix that we deliver at the end between probably because we do have some projects like Messena in Madrid or the second tower in Malaga or other projects in Costa Del Sol that have higher gross margin. And then at the end, depending on the mix, we will end up closer or a little bit, but I would say 24% is a reasonable a very reasonable assumption.
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Okay. Another question for investors about looking at the net result of the first semester, do you expect the full year to be with a positive net profit?
Jorge Pere de Leca, CEO, Metro Basesa: Yes. The answer is this one. Higher than last year.
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Okay. Thank you. One final question is about land sales during the first semester. How do you see the demand for land, both residential and commercial expectations for the rest of the year?
Jorge Pere de Leca, CEO, Metro Basesa: I think I mean, I I briefly mentioned or gave, you know, when you say the the word in in English right now. But I would say in commercial, what we are seeing is is, is that the the demand for office land use is still dormant. It doesn’t really exist. However, the the the possibility of additional land uses in or or, asset class uses in office land, mainly flex living and PVSA has opened a liquidity window, like no other and in some cases even data center. So I would say that office use no, but our alternative uses are what what is driving, you know, our our commercial land sales in the recently deals and and also going forward.
In terms of residential land, I mean, we they’re basically running out of land, resi land for sale. We’re still selling, you know, non, let’s say, those kind of developments that we don’t want to to to to develop ourselves either because they are are too small or they are in a region where, you know, we are where where we are not present and we don’t see attractiveness or volume enough to actually develop there. But there is there is there is definitely activity and and we even see a pickup, of activity in, in smaller cities, in smaller towns. So I think, you know, we kept talking about tier one two years ago, then tier two came. And I would say that now even tier tier three or two and a half, as I like to call them, are cities with activity where where we’re seeing land sales.
And in some cases, if the project is big enough, we actually even, take the decision to develop ourselves.
Juan Carlos Calvo, Director of Corporate Development and Investor Relations, Metro Basesa: Thank you. That concludes the question and answer session. We have no more questions. So this will conclude the presentation from Metro Basesa on the first semester twenty twenty five. The Investor Relations team will be available to take any follow-up questions that you may have.
We thank you for your participation. We look forward to meeting you again next time. Thank you. Goodbye.
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