3i Group reports 'strong' results in challenging year

9th May 2024 07:22

(Sharecast News) - 3i Group reported a 'strong' set of results in what it described as a challenging year on Thursday, with a total return of £3.84bn, representing a 23% return on opening shareholders' funds.

That was down from £4.59bn and 36% of opening shareholders' funds in the 2023 financial year.

Its net asset value (NAV) per share improved to 2,085p by year-end on 31 March, up from 1,745p in the 2023 period, including a 33p per share loss on foreign exchange, swinging from a 65p gain year-on-year.

The FTSE 100 company said its private equity business segment delivered a gross investment return of £4.06bn, making for a 25% return, compared to £4.97bn and 40% a year earlier.

That was primarily driven by a strong performance from European discount retailer Action, which saw significant revenue and EBITDA growth in 2024.

Despite softer performances from certain portfolio companies, overall growth was supported by investments in value-for-money, private label, and healthcare sectors.

Action in particular saw a gross investment return of £3.72bn and strong revenue growth of 28% in 2023.

The retailer's first-quarter performance in 2024 remained strong, with increases in net sales and operating EBITDA noted.

3i said the addition of new stores helped maintain year-to-date like-for-like sales growth of 9.8%.

The infrastructure business meanwhile generated a gross investment return of £99m, or 7%, compared to £86m and 6% in the prior financial year.

While 3i Infrastructure's performance saw modest share price gains, the US infrastructure portfolio continued to perform well.

Throughout the year, the group received over £1.4bn in cash from its portfolio.

To bolster liquidity, it issued a six-year, €500m bond and extended the tenor of its revolving credit facility.

As a result, the group ended the year with liquidity of £1.296bn, net debt of £806m and gearing of 4%.

In line with its performance, 3i Group declared a total dividend of 61p per share for the 2024 financial year, with a second dividend of 34.5p per share scheduled for payment in July, subject to shareholder approval.

"The shape of today's portfolio has served us well in this challenging year and reflects investment decisions taken over the last 12 years," said chief executive officer Simon Borrows.

"Action's compelling growth story continues to be a major driver of the group's return, with overall resilient performance across the remaining portfolio."

Borrows said the company expected that current macroeconomic conditions and geopolitical uncertainty would persist in the near term and that would continue to impact confidence and pricing expectations in the wider mid-cap merger and acquisition market.

"Our rigorous and disciplined approach to capital allocation remains unchanged.

"We have been building resilient portfolio companies that are capable of navigating through these challenging trading conditions."

At 0809 BST, shares in 3i Infrastructure were down 3.8% at 2,861p.

Reporting by Josh White for Sharecast.com.