Barramundi Reports -2.3% Adjusted NAV Return in May with Mixed Portfolio Results
Barramundi Limited’s May update reveals a 2.3% adjusted NAV decline, weighed down by CSL’s earnings downgrade and Brambles’ operational setbacks, despite positive contributions from Xero and Credit Corp.
- May adjusted NAV return down 2.3%
- CSL cuts FY26 guidance amid regulatory and market pressures
- Brambles lowers earnings forecast due to US pallet repair constraints
- Portfolio shifts increase exposure to Brambles, BHP, Rio Tinto
- Credit Corp upgrades trading outlook, maintains profit guidance
May Portfolio Performance and Market Comparison
Barramundi Limited (NZX:BRM) reported a challenging May with a gross performance return of -2.1% and an adjusted net asset value (NAV) return of -2.3%, underperforming the S&P/ASX200 Index (hedged 70% to NZD), which gained 0.5%. The manager noted that while the broader market showed modest gains, Barramundi’s portfolio faced headwinds from key holdings.
Mixed Earnings and Operational Updates from Portfolio Companies
Software firm Xero was a bright spot despite a 6% share price fall, delivering a solid FY26 result with 31% revenue growth and optimistic FY27 guidance projecting up to 35.5% revenue growth. Meanwhile, oOh!media’s shares gained 15% following competing takeover offers and an operational review that led to cost-cutting measures including headcount reductions and scrapping unprofitable retail media partnerships.
On the downside, CSL’s 22% share price drop reflected a downgrade to FY26 guidance amid a detailed 90-day review by interim CEO Gordon Naylor. The company cited four factors for the downgrade: proactive inventory reductions in the US, regulatory changes in China impacting Albumin sales, Middle East conflict delays to haemophilia B gene therapy rollout, and competition from generics in the US affecting its Vifor iron product sales.
Brambles’ shares plunged 27% after an unexpected earnings guidance cut. The company faces operational bottlenecks in its US pallet repair network, leading to increased costs and pallet shortages that have forced a pause on new customer initiatives. Management expects these issues to persist into the first half of FY27 but anticipates resolution by year-end. The company is also incurring significant expenditure to purchase additional pallets to mitigate shortages.
Credit Corp and Macquarie Deliver Stability
Credit Corp provided a positive trading update with lending volumes up 18% year-to-date and maintained full-year profit guidance of NZD 100-110 million, reflecting management’s repositioning efforts including US sales expansion and focused R&D spend. Macquarie Group modestly exceeded FY26 expectations, ending a two-year earnings downgrade cycle, supported by increased demand for commodity hedging amid ongoing Middle East unrest.
Portfolio Adjustments and Strategic Positioning
In response to market dynamics, Barramundi increased its holdings in Brambles, BHP, and Rio Tinto while trimming positions in REA and Cochlear. The fund continues to focus on long-term growth through a diversified portfolio of 20-35 Australian companies, with no gearing and a market capitalisation of NZD 195 million.
The manager emphasised Brambles as a high-quality company facing a short-term, manageable issue, noting the company’s resilience against AI disruption and attractive valuation. Barramundi also maintains its share buyback program and dividend reinvestment plan to support shareholder returns.
Bottom Line?
Barramundi’s May update highlights the tension between short-term operational setbacks in key holdings and the fund’s strategic commitment to long-term growth, setting the stage for close scrutiny of Brambles’ recovery and CSL’s regulatory navigation.
Questions in the middle?
- Will Brambles resolve its US pallet repair constraints within FY27’s first half as expected?
- How will CSL’s regulatory challenges in China and Middle East conflicts impact longer-term earnings?
- Can Barramundi’s portfolio adjustments offset near-term headwinds and restore NAV growth momentum?
