Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Perpetual posts flat FY result amid industry headwinds

Glenn Freeman  |  31 Aug 2018Text size  Decrease  Increase  |  
Email to Friend

Narrow-moat fund manager Perpetual (ASX: PPT) reported statutory net profit of $140.2 million for fiscal 2018, up 2 per cent on last year.

Management also announced a final dividend of 140 cents a share for the second half, lifting the full-year dividend to $2.75 a share.

"In a challenging year for the financial advice industry, our strategy and differentiated approach have underpinned record inflows and 10 consecutive halves of positive net flows," says Perpetual's interim CEO, Chris Green.

calculator scrutiny fund names article Perpetual

Perpetual's balance sheet remains in good shape, says Gunasekera

He alludes to the fall-out from the Kenneth Hayne-led royal commission, which severely dented sentiment toward major banks and their in-house wealth management businesses.

Responding to management's suggestion this could swing in favour of the non-aligned fund manager, Morningstar equity analyst, Chanaka Gunasekera says: "it's hard to tell at the moment, when we really don't know what is going to come out in the final report".

The royal commission's final recommendations are due in February next year, along with results from the Productivity Commission inquiry into financial services.

Perpetual's investments division saw $2.5 billion of net outflows during the year, increasing from $900 million in outflows for fiscal 2017. These were largely driven by institutional redemptions from Perpetual's Australian equity funds, which comprise about 70 per cent of this business segment.

These were offset by its private wealth and corporate trust divisions, "which are doing well," says Gunasekera.

Perpetual Private's profit before tax was $46.1 million, 14 per cent higher than fiscal 2017.
Perpetual Corporate Trust's profit before tax was $42.6 million for the year ended 30 June, up 16 per cent over the same period last year.

Gunasekera anticipated the flat result overall, but anticipates further declines in Perpetual's investment division into fiscal 2019.

"Our view [is] that it's core investment division is suffering from the structural issues of industry super funds moving more asset management in-house, and a trend to more passive investment styles," he said last month, in response to Perpetual's fourth-quarter funds under management announcement.

Last month's result led to a slight reduction in fair value to $43.90 a share, from $45.50 previously.

Gunasekera says the company's balance sheet remains in good shape, with only 11 per cent gearing and a consistently low level of corporate debt.

He also notes Perpetual has maintained its 90 per cent dividend payout ratio and increased its dividend 4 per cent on last year, exceeding his expectations.

Perpetual's share price was trading at $46.03 at market close Thursday.

 

More from Morningstar

Boral posts $441m profit on US buy, earnings

Climbing health care costs squeeze retirees

Make better investment decisions with Morningstar Premium | Free 4-week trial

 

Glenn Freeman is senior editor, Morningstar Australia

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is senior editor for Morningstar Australia

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend