HMC Capital’s Half-Year Profit Falls 98% to $5.8m After Major Acquisition
HMC Capital Limited reported a sharp decline in half-year profit to $5.8 million, driven by acquisition costs and market conditions, while securing a major renewable energy portfolio and maintaining steady dividends.
- Statutory profit after tax falls 98% to $5.8 million
- Acquisition of Neoens Victorian portfolio for $950 million
- Operating earnings before tax down 79% to $41.6 million
- Interim and final dividends maintained at 6.0 cents per share
- Strategic partnership announced for Energy Transition Platform
Profit Collapse Reflects Acquisition and Market Pressures
HMC Capital Limited’s half-year results for the period ending 31 December 2025 reveal a dramatic fall in statutory profit after tax, plunging 98% to $5.8 million from $274.5 million a year earlier. This steep decline is largely attributable to significant acquisition and transaction costs related to the group’s $950 million purchase of the Neoens Victorian renewable energy portfolio, alongside broader market headwinds impacting investment valuations.
Major Acquisition Expands Renewable Energy Footprint
The acquisition of Neoens Victorian portfolio, completed in August 2025, marks a strategic expansion into renewable energy assets, now classified as held-for-sale pending finalisation. The purchase was financed through a combination of senior asset-level debt of $556.3 million and a $200 million mezzanine facility, underscoring HMC’s commitment to growing its Energy Transition Platform. This move positions HMC to capitalise on the accelerating shift towards sustainable infrastructure, despite near-term earnings pressure.
Operating Earnings and Revenue Trends
Operating earnings before tax, a key measure of underlying business performance, declined 79% to $41.6 million from $202.2 million in the prior corresponding period. Total revenue and other income (excluding fair value changes) fell to $122 million from $151.8 million, reflecting softer market conditions and the impact of acquisition-related expenses. Despite these challenges, the group’s net tangible assets per share rose slightly to $3.61, indicating a resilient asset base.
Dividend Policy Maintains Shareholder Confidence
In a signal of confidence, HMC declared a final dividend of 6.0 cents per share for the year ended 30 June 2025 and an interim dividend of 6.0 cents per share for the current period, both partially franked. This steady dividend payout amidst earnings volatility suggests a commitment to returning value to shareholders while navigating transitional phases in the portfolio.
Strategic Partnership and Outlook
Post-period, HMC announced a strategic partnership to further invest in its Energy Transition Platform, subject to customary conditions. This development could provide additional capital and expertise to accelerate growth in renewable assets. Meanwhile, impairment assessments on key associates, including DigiCo Infrastructure REIT and HealthCo Healthcare and Wellness REIT, concluded no write-downs were necessary, reflecting management’s confidence in the underlying asset values despite market uncertainties.
Bottom Line?
HMC’s bold acquisition and strategic moves set the stage for a transformative phase, but near-term earnings will remain under scrutiny.
Questions in the middle?
- How will the Neoens Victorian portfolio acquisition impact HMC’s earnings trajectory in the next financial year?
- What are the terms and potential scale of the newly announced strategic partnership for the Energy Transition Platform?
- How might ongoing uncertainty around Healthscope and other key tenants affect HMC’s associate investments?
