Why Did Perpetual’s Net Profit Collapse Despite Revenue Growth?
Perpetual Limited reported a modest 2% revenue increase for FY25, yet its net profit after tax plunged by 88%, prompting a cautious outlook despite a declared final dividend.
- Revenue up 2% to $1.38 billion
- Net profit after tax down 88% to $58.2 million
- Underlying net profit nearly flat, down 1% to $204.1 million
- Final dividend declared at 54 cents per share, unfranked
- Dividend Reinvestment Plan operates without discount
Revenue Growth Amid Profit Pressure
Perpetual Limited’s FY25 financial results reveal a nuanced picture. The company managed to increase its revenue from ordinary activities by 2% to $1.379 billion, signaling steady top-line growth in a challenging market environment. However, this positive momentum was overshadowed by a dramatic 88% decline in net profit after tax, which fell to just $58.2 million. This stark contrast between revenue and profitability raises questions about underlying cost pressures or one-off impacts that have weighed heavily on the bottom line.
Underlying Profit Holds Steady
Excluding significant items, Perpetual’s underlying net profit after tax showed resilience, slipping only 1% to $204.1 million. This suggests that the core business remains relatively stable despite the headline profit shock. The company’s revenue from structured investments also increased modestly to $11.4 million, up from $8.3 million the previous year, indicating some diversification in income streams.
Dividend and Shareholder Returns
In light of these results, Perpetual declared a final dividend of 54 cents per share, payable on 3 October 2025. Notably, the dividend is unfranked, which may affect its attractiveness to certain investors seeking tax credits. The total dividends for the year amount to 115 cents per share, combining interim and final payments. The company’s Dividend Reinvestment Plan (DRP) will operate without a discount, with share allocation based on the average market price over a 10-day period in September. This approach reflects a balanced stance on shareholder returns amid earnings volatility.
Balance Sheet and Market Implications
Perpetual’s net tangible assets per security improved slightly from negative $2.60 to negative $2.12, signaling a modest strengthening of the company’s asset base. While still negative, this improvement may provide some comfort to investors concerned about balance sheet health. The absence of dividend franking and the sharp profit decline, however, could temper market enthusiasm and invite scrutiny on cost management and future earnings sustainability.
Looking Ahead
The FY25 results leave investors with a mixed outlook. While revenue growth and stable underlying profit suggest operational resilience, the significant net profit drop and unfranked dividend highlight challenges ahead. Market watchers will be keen to see how Perpetual addresses these issues in its upcoming strategic updates and whether it can restore stronger profitability without compromising shareholder returns.
Bottom Line?
Perpetual’s FY25 results underscore a pivotal moment as it balances growth with profitability challenges and shareholder expectations.
Questions in the middle?
- What factors contributed most to the 88% net profit decline despite revenue growth?
- Will Perpetual reinstate dividend franking in future payments to attract investors?
- How will the company manage costs and capital allocation to improve underlying profitability?