Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 3i Group PLC (TGOPF, Financial) delivered a total return of 10% for the half year, with a net asset value per share of GBP22.61.
- The private equity portfolio showed strong performance, with 94% of the portfolio by value growing earnings over the past 12 months.
- Action, a key investment, reported net sales up 21% and operating EBITDA up 26% for the first nine months of the year.
- The company completed significant disposals, including Nexeye and WP, achieving good returns despite a challenging market.
- 3i Group PLC (TGOPF) increased its stake in Action to 57.9%, reflecting confidence in its long-term growth potential.
Negative Points
- Foreign exchange movements negatively impacted the net asset value by 48p per share.
- The automotive sector and the white-collar recruitment market in North America faced specific sector difficulties, affecting some portfolio companies.
- The share price of 3i Infrastructure has not reflected the strength of the underlying portfolio, which remains a disappointment.
- The company faces challenges from weak growth and political uncertainties in several markets.
- Action's performance was slightly hindered by a negative price effect due to price reductions over the past 21 months.
Q & A Highlights
Q: Can you quantify the negative price drag on Action this year and any plans to change it in the last two months?
A: The negative price drag is less than a whole percentage point, and we don't expect a major change. It depends on the mix of seasonal versus non-seasonal products as we progress through the year. β Simon Borrows, CEO
Q: How is the buying environment for Action, and will it lead to further price reductions for consumers?
A: The big drops in pricing for COGS are leveling out, but we have scale advantages and strong supplier interest. We expect continued benefits from COGS reductions and are increasing our direct import component. β Simon Borrows, CEO
Q: What are the potential opportunities in the investment environment, and which sectors are you most excited about?
A: We see opportunities across all sectors of interest, with more realistic pricing from vendors. Middle-market funds are short on money, creating a more balanced market. We hope to make a couple of new investments in the second half. β Simon Borrows, CEO
Q: How has the legal change in France affecting supermarket discounting impacted Action's market share?
A: It's hard to attribute specific changes to the legal environment, but Action is trading well in France, with healthy like-for-likes and a growing consumer base. β Simon Borrows, CEO
Q: What is the outlook for Action's dividend following the restructuring?
A: We expect to follow the normal course, with the next dividend likely in December, followed by another review in March. β Simon Borrows, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
