Velcan Holdings Pivots to Profit Amid Global Economic Headwinds

LUXEMBOURG – May 04, 2026

Velcan Holdings, the Luxembourg-based investment firm, has announced a significant financial turnaround, posting a positive net statutory income of €1.3 million for 2025. The result marks a stark reversal from the €2.8 million loss reported in the previous year, demonstrating a notable resilience against a backdrop of global market volatility and geopolitical friction. The company's Net Asset Value (NAV) also saw a modest but steady climb, increasing by 1% to €136.3 million.

This return to profitability was achieved despite what the company described as a challenging environment, fraught with persistent U.S. trade tensions, rising protectionism, and uneven economic recoveries in key markets like China. The performance highlights the effectiveness of the firm's diversified investment strategy and its agile response to shifting market dynamics.

A Strategy of Diversification and Agility

At the core of Velcan Holdings' 2025 success was a meticulously managed global investment portfolio. The firm's annual report reveals a strategy designed to weather storms by not placing all its bets in one basket. As of the end of the year, the portfolio was heavily weighted towards liquidity and stable assets, with 41% held in cash and short-term Western sovereign bonds. This conservative base provided a buffer against the market's intra-year turbulence.

The growth engine of the portfolio was its 47% allocation to long equity positions. Rather than chasing broad market trends, Velcan focused on specific sectors and regions, with significant investments in Asian equities—including Chinese, Japanese, Filipino, Malaysian, and Indonesian markets—and the German automotive manufacturing sector. This geographic diversification proved crucial. While the firm noted that China's mild deflation and real estate challenges were a negative for equity investments, its broader Asian exposure and investment in the CSI 300 China index were part of a calculated, global approach.

The company's agility was further demonstrated by its tactical shifts during the year. In the first half of 2025, as geopolitical events fueled a flight to safety, the firm capitalized on the strong performance of gold. However, management chose to significantly reduce and ultimately exit its exposure to gold and silver-related equities during that same period, locking in gains before market conditions potentially shifted again. This active management style, aimed at capitalizing on "market dislocations," allowed the firm to navigate a year where global equity markets, though resilient on the surface, masked significant underlying volatility.

The Brazilian Paradox: Climate Risk Meets Market Forces

While its financial portfolio showcased strategic success, Velcan's tangible asset, the Rodeio Bonito Hydro Power Plant in Brazil, told a more complex story—one that sits at the intersection of climate change and energy economics. The plant's electricity generation fell significantly in 2025, producing 44,324 MWh compared to 52,190 MWh in 2024. The company attributed this 15% drop directly to "very low" rainfall and water discharge, noting that the conditions were worse than the previous year and part of a multi-year drought phenomenon impacting all of Brazil.

This highlights a critical vulnerability for Brazil, the world's second-largest hydropower generator. With hydro still accounting for over half of the nation's electricity, persistent drought conditions pose a systemic risk to its energy grid. Yet, in a paradoxical twist, Velcan's revenue from the plant increased. Turnover from electricity sales rose by 3% in Euros to €3.0 million and an even more impressive 11% in its local currency to BRL 19.1 million.

The explanation lies not in the volume of water, but in the dynamics of the Brazilian energy market. Throughout 2025, Brazil experienced substantial increases in electricity tariffs. With residential bills rising over 12% and industrial prices jumping more than 17% year-over-year in some periods, the higher price per megawatt-hour more than compensated for the lower production volume. Favorable movements in the BRL/EUR exchange rate further bolstered the returns when translated back to Euros. The performance of Rodeio Bonito serves as a powerful case study in how revenue in the renewable sector can be decoupled from raw output, driven instead by market pricing, regulatory environments, and macroeconomic factors, even as climate risks directly impact physical operations.

A Leaner Approach to Corporate Governance and Capital

Beyond its investment performance, 2025 also marked a deliberate shift in Velcan's corporate strategy, emphasizing efficiency and shareholder value. The company adopted a new, simplified reporting format, discontinuing its half-year accounts. This move is legally grounded in its classification as a "small-sized undertaking" under Luxembourg law, which exempts it from more onerous reporting requirements. Listed on the Euro MTF market—a platform known for its flexible and cost-effective framework compared to more heavily regulated exchanges—Velcan is leveraging its status to reduce administrative burden and associated costs. While this reduces the frequency of formal financial updates for investors, it aligns with a corporate objective of streamlining operations.

This focus on shareholder value was also evident in its capital allocation strategy. The company continued a share buyback program, repurchasing 73,078 shares for approximately €1.29 million. The stated goals were to provide liquidity for shareholders wishing to sell and to cover grants of free shares to employees. By year-end, the company held over 15% of its own share capital.

However, the firm announced that the program, which expired on December 31, 2025, would not be immediately renewed for 2026. This decision could signal a strategic pivot. While buybacks are often used when management believes its stock is undervalued, the cessation of the program may suggest that capital is being preserved for new investment opportunities or that the management's assessment of the stock's valuation has changed. This pause in buybacks, combined with the leaner reporting structure, points to a management team focused on optimizing its financial and administrative resources as it prepares for future market challenges and opportunities. The company remains committed to its long-term, global investment strategy, poised to identify and act on market shifts as they arise.