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METLEN | Credibility reset, core earnings power still intact

Profit warning to reset 2025e EBITDA to c€750mn – Metlen issued a profit warning last week, cutting its 2025 EBITDA outlook by c25% (to €750mn) reflecting cost overruns in its M Power Projects (MPP) division alongside timing slippage in closing 3 asset rotation transactions. On the MPP side, management flagged unanticipated cost overruns and schedule delays in select projects, with the Protos project acting as the initial catalyst, followed by the identification of additional overruns during the Q4/FY’25 closing process. The press release emphasized that these issues are contained within MPP and do not affect the Group’s core Energy, Metals or M RES activities. Impacted projects are now expected to be completed within revised budgets and timelines, supported by tighter controls and enhanced quarterly project reviews introduced following the London listing.

The read-through in the short-term – In the near term, we expect: 1) reported profitability to reset materially lower in 2025e following the guidance cut, and 2026e to be revised down (mid-to-high single digits at EBITDA level in our case) to account for (likely) minimal MPP profitability and phasing adjustments in M RES; 2) investors to ascribe little to no value to MPP, effectively treating the segment on a run-off or zero-value basis until execution visibility improves; 3) the episode to introduce a credibility overhang, as investors are likely to seek evidence that cost controls and project governance have been stabilized before re-rating the stock. On the question regarding the scope for further meaningful losses within MPP, we believe the risk of a material new shock is limited, given that the key problematic projects are presumably c75-80% complete – on our understanding – and, as a result, any additional slippage would probably translate into contained P&L noise.

Estimates update – We revise our 2025e estimates to reflect the updated guidance. We also lower our 2026-27e EBITDA by c7%/3%, removing any contribution from MPP, while also introducing timing adjustments to select M RES disposals and refining our Metals and Integrated Utility estimates. We remind that MPP represented