Source: cyprus-mail.com
Demetra Holdings Plc on Friday reported a sharp decline in profitability for the year ended December 31, 2025, with net profit after tax falling to €10.66 million for the group and €10.72 million for the company, compared with significantly higher levels in the previous year.
The group’s profit stood at €10.66 million, or 5.33 cents per share, down from €132.46 million, or 66.23 cents per share in 2024, reflecting a steep year-on-year decrease.
The decline was primarily attributed to the inclusion in 2024 results of €40.32 million in profit contribution from its stake in Hellenic Bank, which was acquired by Eurobank, recorded up to June 30, 2024.
In addition, the 2024 results included €93.61 million in gains from equity securities on the Cyprus Stock Exchange (CSE), which significantly boosted profitability in that year.
These gains included €92.53 million related to shares in Hellenic Bank, which were reclassified on July 1, 2024 from investments in associates to financial assets at fair value through profit or loss.
The investment in Hellenic Bank was subsequently sold on February 10, 2025, with no additional gain recognised in 2025, as the total profit had already been recorded in previous years.
The net asset value per share on a consolidated basis increased to 255.43 cents at the end of 2025, compared with 249.92 cents at the end of 2024, marking a 2.2 per cent increase.
The group’s holdings in equity securities generated €5.41 million in profit in 2025, compared with €93.61 million in 2024, reflecting the absence of one-off gains seen in the previous year.
Dividend income rose by 8.5 per cent to €0.99 million, compared with €0.91 million in 2024.
Interest income recorded a substantial increase, reaching €6.88 million, compared with €0.25 million in 2024, driven by returns on bank deposits and cash equivalents following the disposal of the Hellenic Bank investment.
The group’s real estate sector reported a strong rise in rental income, which increased to €2.78 million from €1.25 million in 2024.
However, overall profitability in the segment was negatively affected by a €1.64 million loss from the revaluation of land and properties, compared with a €0.27 million gain in 2024.
Operating expenses decreased by 9.0 per cent to €2.13 million, compared with €2.34 million in 2024.
This reduction came despite higher spending on staff remuneration and board benefits, as well as costs related to evaluating new investment opportunities, as these increases were outweighed by lower legal and professional fees compared with 2024, when such costs were elevated due to the Hellenic Bank share sale.
In contrast, financing costs rose significantly by 71.6 per cent to €0.85 million, compared with €0.49 million in 2024, mainly due to new borrowing facilities totalling €30.00 million.
The group also recognised a €0.02 million reversal of expected credit loss provisions, compared with a €0.01 million provision in 2024, in accordance with IFRS 9.
A further €0.01 million reversal of loss provisions on receivables from associated companies was recorded, compared with a €1.63 million provision in 2024.
At the company level, net profit after tax reached €10.72 million, compared with €132.45 million in 2024, reflecting similar factors affecting the group’s results.
The company’s net asset value per share increased to 254.89 cents, from 249.38 cents in 2024, also representing a 2.2 per cent rise.
Financial assets at fair value through profit or loss generated €5.36 million in gains, compared with €93.52 million in 2024.
These gains were mainly derived from equity investments, which recorded €5.41 million in profit, offset by a €0.05 million loss from fair value adjustments on receivables from subsidiaries.
Dividend income at the company level fell by 26 per cent to €1.13 million, compared with €1.53 million in 2024, due to lower distributions from subsidiaries.
Interest income rose sharply to €6.88 million, from €0.24 million in 2024, driven by returns on deposits following the Hellenic Bank transaction.
Income similar to interest from loans to subsidiaries declined by 37.8 per cent to €0.72 million, compared with €1.10 million in 2024, due to lower interest rates.
The company’s real estate segment recorded a slight increase in rental income to €0.09 million, compared with €0.08 million in 2024.
However, profitability in this segment was negatively impacted by a €0.14 million revaluation loss, compared with a €0.01 million gain in 2024.
Operating expenses at the company level fell by 16.4 per cent to €1.76 million, from €2.11 million in 2024, reflecting similar cost dynamics as the group.
Financing costs increased by 75.0 per cent to €0.86 million, compared with €0.49 million in 2024, again due to new borrowing facilities.
A €0.06 million reversal of impairment on investments in subsidiaries was recorded, compared with a €0.34 million impairment in 2024, reflecting improved net asset positions of subsidiaries.
The company also recorded a €0.02 million reversal of expected credit loss provisions and a €0.01 million reversal of loss provisions on receivables from associated companies, mirroring the group’s results.
As at December 31, 2025, total assets stood at €521.14 million for the group and €519.51 million for the company, compared with €509.95 million and €508.14 million respectively in 2024.
The group’s assets were primarily allocated to equity investments and financial assets at 84.4 per cent, followed by real estate development and management at 14.0 per cent, and other projects at 1.5 per cent.
The board of directors stated that it has not taken any decision regarding dividend distribution for 2025, compared with no dividend in 2024.
Moreover, the group’s activities continue to focus on equity investments, real estate development and management, and participation in other projects, with no significant changes during the year apart from the acquisition of 100 per cent of Demetra Residual Portfolio Assets Ltd.
The company also identified several key risks, including market price risk, interest rate risk, credit risk, liquidity risk, foreign exchange risk, operational risk, compliance risk, equity holding risk, capital management risk and legal risk.
Geopolitical developments, including ongoing conflicts in Ukraine and the Middle East, were highlighted as potential risks to global economic conditions and the company’s performance.
The company pointed out that he global economic environment in 2026 has been significantly affected by the conflict in the Middle East, which has disrupted energy supply chains on an unprecedented scale.
According to the International Energy Agency, it continued, the disruption exceeds the combined oil crises of 1973 and 1979 and the 2022 gas crisis in Ukraine, with global oil supply reduced by approximately 11 million barrels per day and liquefied natural gas supply down by around 20 per cent.
Shipping through the Strait of Hormuz, which typically handles about 20 per cent of global oil supply, has nearly halted.
Goldman Sachs estimates that disruptions to oil flows from the Persian Gulf amount to approximately 17.6 million barrels per day, or 17 per cent of global supply, making the shock significantly larger than previous disruptions.
At least 40 energy infrastructure sites across nine countries have sustained severe damage, with recovery expected to take months even if the conflict ends.
According to the IMF’s World Economic Outlook published in April 2026, global growth is projected at 3.1 per cent in 2026 and 3.2 per cent in 2027, assuming limited duration and intensity of the conflict.
Global inflation is expected to rise to 4.4 per cent in 2026 before easing to 3.7 per cent in 2027.
More adverse scenarios suggest global growth could slow to 2.5 per cent or even 2.0 per cent, with inflation potentially exceeding 6 per cent by 2027.
In Europe, economic conditions have worsened further in early 2026, with eurozone growth revised down to 0.9 per cent and inflation revised up to 2.6 per cent, largely due to the energy crisis.
Natural gas prices in Europe surged by 63 per cent in the week following the outbreak of hostilities, compared with around 11 per cent in the United States, highlighting Europe’s structural exposure to Middle Eastern energy supplies.
These stagflationary pressures are limiting the European Central Bank’s (ECB) policy flexibility at a time when economic growth requires support.
Deeper structural challenges in Europe also remain unresolved, with the Draghi report of September 2024 warning that the European economic model has been caught off guard by the return of expansionary industrial policies in the United States and China.
By January 2026, only 15.1 per cent of the report’s 383 recommendations had been fully implemented, with progress concentrated in defence and trade, while energy and digitalisation continue to lag behind.
The productivity gap between the EU and the United States remains pronounced, although it has narrowed slightly, with output per hour in the EU rising by 1.4 per cent in 2025, compared with 0.3 per cent in 2024, while US productivity grew by 2.1 per cent, widening the cumulative transatlantic gap formed after the pandemic.
At the same time, rising defence spending linked to the war in Ukraine and escalating tensions in Iran provides some offsetting momentum for European economies.
Efforts to advance the EU’s capital markets union have gained traction, with finance ministers from six major member states pushing the initiative forward in January 2026.
In April 2026, the European Central Bank called for concrete steps towards a pan-European deposit insurance scheme, urging governments to break a long-standing deadlock on completing the banking union.
The ECB argued that a unified deposit fund would be less likely to be depleted than national schemes and would reduce the long-standing link between banks and sovereigns, a key source of systemic risk.
Cross-border banking activity has remained stagnant for a decade, with lenders facing persistent barriers to consolidation, limiting Europe’s global competitiveness.
Before the current conflict, Cyprus stood out as one of the eurozone’s strongest-performing economies, with GDP growth of 3.9 per cent in 2024 and an estimated 3.8 per cent in 2025, more than double the eurozone average.
Growth has been supported by the technology sector, real estate, professional services and tourism, which recorded a historic high of 4.53 million visitors in 2025, up 12.2 per cent year-on-year.
The country’s fiscal position remains strong, with a budget surplus of 4.1 per cent of GDP in 2024 and 2.6 per cent in 2025, while public debt declined to 55.5 per cent of GDP in 2025 and is projected to fall further.
Unemployment reached 4.2 per cent in February 2026, while credit ratings from major agencies have firmly placed Cyprus in investment grade territory.
However, the company said that the conflict in Iran is expected to affect the country’s economic trajectory.
Daily cancellation rates for short-term bookings rose sharply from around 15 per cent before the conflict to as much as 100 per cent immediately after the outbreak of war.
The US Department of State also upgraded its travel advisory for Cyprus to Level 3.
The shipping sector is facing pressure from increased transit costs, while tourism may be disproportionately affected due to Israel accounting for 13 per cent of arrivals in 2025.
Losses are expected to be concentrated in March and April, with peak summer tourism likely to be less affected.
Assuming the conflict subsides by April 2026, the University of Cyprus Economics Research Centre forecasts GDP growth slowing to 2.7 per cent in 2026, a downward revision of 0.7 percentage points, with inflation averaging 2.8 per cent.
Growth in 2027 is expected to remain broadly stable at 2.8 per cent, with Cyprus still projected to outperform the eurozone average.
Two structural pillars are expected to support the economy, namely the information and communication technology sector and professional services, both benefiting from Cyprus’ role as a regulated EU hub.
Relocation of foreign companies from conflict-affected regions, including Israel, is expected to sustain demand for services and real estate.
In the energy sector, the crisis is accelerating the need for Cyprus to expand renewable energy capacity, leveraging its high solar exposure of between 2,700 and 3,500 hours of sunshine annually.
Despite the risks, the company said that Cyprus’ growth drivers remain largely intact, supported by strong fiscal capacity, although much will depend on the duration of the conflict and the pace of energy market stabilisation.
Looking ahead, the company and the group are operating in a highly uncertain environment for the remainder of 2026, shaped by geopolitical tensions, market volatility, monetary policy shifts and disruptions to trade and energy flows.
Despite the positive outlook for the Cypriot economy, exposure to sectors such as real estate, tourism and capital markets leaves the group vulnerable to external shocks.
Under these conditions, the board of directors stated that it is not in a position to provide a reliable forecast for 2026 financial results, which will depend on developments in the Cyprus Stock Exchange, the real estate market, euro interest rates and broader geopolitical stability.
Finally, the company reported that no significant changes in the group’s activities are expected in the foreseeable future.