Profit Falls 12.6% but AMCIL Maintains Dividend Amid Market Caution
AMCIL Limited posted a half-year profit of $3.6 million, down 12.6%, yet its portfolio outperformed the S&P/ASX 200 with an 8.7% return. The company declared a steady interim dividend amid cautious market conditions.
- Half-year profit declined 12.6% to $3.6 million
- Portfolio return of 8.7% beats S&P/ASX 200’s 7.6% over six months
- Interim dividend maintained at 1.0 cent per share, fully franked
- Portfolio diversification increased with new holdings added
- Management expense ratio rose slightly to 0.53%
Strong Portfolio Performance Amid Profit Pressure
AMCIL Limited has reported a half-year profit of $3.6 million for the six months ending 31 December 2024, marking a 12.6% decline from the previous corresponding period. This drop primarily reflects a reduction in income from the trading and options portfolios, which had contributed more significantly in the prior half-year.
Despite this profit dip, AMCIL’s investment portfolio delivered a robust return of 8.7% including franking credits, outperforming the S&P/ASX 200 Accumulation Index return of 7.6% over the same period. Over the full 12 months to December 2024, AMCIL’s portfolio return was 17.3%, comfortably ahead of the index’s 12.7%.
Dividend Consistency and Expense Management
The board declared an interim dividend of 1.0 cent per share, fully franked at 30%, consistent with last year’s interim payout. This steady dividend reflects AMCIL’s commitment to providing reliable income to shareholders despite the fluctuations in profit.
Management expenses increased modestly, with the annualised management expense ratio rising to 0.53% from 0.46% in the previous year. This was attributed to a lower refund from the services company AICS compared to the prior period.
Portfolio Strategy and Market Positioning
AMCIL’s portfolio became less concentrated over the year, expanding from 41 to 48 holdings and reducing the top 20 holdings’ share of the portfolio from 77% to approximately 70%. New investments included Sigma Healthcare, Redox Limited, Technology One, Block, and Amcor, reflecting a strategic focus on quality companies with strong growth potential and owner-driven management.
The company maintained an underweight position in the Resources sector due to concerns about China’s growth outlook, which helped offset the underweight exposure to the highly valued Banking sector. Notably, AMCIL exited positions in Mineral Resources and PEXA due to governance concerns and unmet investment expectations respectively.
Outlook Amid Market Uncertainty
AMCIL’s management remains cautious about the economic outlook and the timing of interest rate changes in Australia. Elevated market valuations and sector performance disparities suggest potential volatility ahead. However, AMCIL is well positioned with liquidity and a portfolio of quality companies to capitalize on emerging opportunities, particularly during market dislocations.
The company plans to update shareholders via a webcast on 24 January 2025, providing further insights into its strategy and outlook.
Bottom Line?
AMCIL’s ability to outperform the market despite profit pressures underscores its disciplined investment approach, but cautious eyes remain on economic headwinds ahead.
Questions in the middle?
- Will AMCIL’s trading and options portfolios regain momentum to boost future profits?
- How will AMCIL navigate potential market volatility given its cautious stance on valuations?
- What impact will sector rotation have on AMCIL’s portfolio composition and returns?
