AFIC profit lower as major investments disappoint, pay lower dividends

Australia’s biggest listed investment company has underperformed in the December half-year on weaker dividend income and disappointing trading by stocks including James Hardie, Reece and ARB.

Australian Foundation Investment Company’s portfolio lost 2 per cent in value during the six months, falling well short of the 4.2 per cent returned by the S&P-ASX200 Accumulation Index for the period.

“Underperformance came from many large core holdings that had significant declines in their share prices during the year,” AFIC said on Wednesday.

“These included CSL, ARB Corporation, James Hardie Industries, CAR Group, Mainfreight and REA Group,” it said.

“IDP Education has also been a disappointing investment for us having a material negative impact on performance.

“Additionally, having no exposure to small and mid-cap resources which were up substantially over the period also had a significant impact.

“AFIC is not typically an investor in these sectors given the highly cyclical nature of many companies within this area of the market and lack of consistent earnings growth.”

AFIC’s net profit for the half-year subsequently fell 4.6 per cent to $147 million, with revenue off 2.8 per cent to $168.7m.

The group held its interim dividend steady at a fully franked 14.5¢ a share but will also pay a special dividend of 2.5¢.

As well as the weaker performances by key investments, AFIC also called out reduced dividend income during the half-year from BHP, Woolworths and Woodside Energy.

Shares in AFIC were unchanged at $7.12 as at 7.30am.

More to come.