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Perpetual share price gets a boost from full year results

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The Perpetual Limited (ASX: PPT) share price has received a boost today, after the company released its results for the 2020 financial year (FY20).  

Highlights from Perpetual’s full-year results

Earlier today, Perpetual released its financial report for FY20.

The company’s report was headlined by a 29% decline in net profit after tax for FY20 of $82.0 million. According to the company, lower revenues from outflows and lower funds under management stagnated its performance. Average funds under management were $25 billion, down 13% year-on-year.

Perpetual also recorded a 5% drop in revenue to $487 million for the full-year. Perpetual Investments, which contributes 36% to the company’s revenue, recorded a profit of $55 million, down 31% from the prior year. The company also recorded positive results in its corporate trust division, where profits before tax rose 16% for the year.

The fund manager also announced that it will be paying a final dividend of 50 cents per share. As a result, Perpetual will be paying a total dividend of $1.55 per share, reflecting a 94% payout ratio.

The company’s management noted that Perpetual’s diversified business has provided the company with some protection in a volatile market. In addition, Perpetual highlighted the poor performance of the overall S&P/ASX All Ordinaries Index (ASX: XAO), which contributed to lower revenue for the year.

What is the outlook for Perpetual?

In the company’s full year report, Perpetual elaborated on the company’s future dividend settings. Perpetual noted that future dividends will be paid on revised underlying profit after tax, in order to reflect the company’s operating cashflows.

The company also highlighted its recent acquisition of international investment firm Barrow Hanley. According to Perpetual, the takeover will boost assets under management to $92.3 billion from less than $30 billion, whilst also giving the company greater access to global investment products and investor base. Perpetual completed a $275 million capital raising in late July to help fund the $465 million purchase.

Perpetual also noted that the COVID-19 pandemic will continue to cause a challenging market in the medium to long-term. However, the company’s management assured shareholders that Perpetual is well capitalised to navigate the challenging environment.

Foolish takeaway

At the time of writing, the Perpetual share price is trading more than 2% higher for the day at $31.77. Shares in Perpetual have been sold-down after hitting an intra-day high of $32.38 earlier. The Perpetual share price is still trading more than 22% lower for 2020.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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