Fidelity European Trust PLC on Monday warned on a tricky economic outlook but beat its benchmark in the first-half and announced a dividend hike on the back of a higher net asset value.
The Tadworth, England-based investment trust said net asset value per share rose 11% to 413.01 pence as at June 30 from 370.55p a year prior.
Fidelity European said NAV total return for the first half of 2024 was 7.6%, outperforming its benchmark, the FTSE World Europe (ex UK) index, which had a return of 7.1%.
The company said London-based private equity and venture capital company 3i Group PLC, Denmark-based pharmaceuticals firm Novo Nordisk AS, which is known for its weight loss drugs Wegovy and Ozempic, and Veldhoven, Netherlands-based supplier to semiconductor firms ASML Holding NV were key drivers of performance.
Detractors were Clichy, France-based personal care firm L’Oreal SA, Vevey, Switzerland-based food company Nestle SA and Paris-based luxury goods company LVMH Moet Hennessey Louis Vuitton SE.
‘The recovery in consumer spending in China has been more anaemic than expected, and has not been able to offset weaker trends elsewhere,’ Fidelity European said.
Fidelity European upped its interim dividend by 10% to 3.60 pence per share from 3.26p a year prior.
Portfolio Managers Sam Morse and Marcel Stotzel said: ‘Whatever the constitution of the new French government following the result of the French parliamentary elections, we have little optimism regarding the short or long-term outlook for the French domestic economy for the same reasons that we are gloomy about the outlook for the domestic economies of Europe (which represent about one third of the sales and profits of continental European companies). Ageing populations, low productivity, high and growing levels of government debt, etc, will mean that growth is likely to remain anaemic. Thankfully, domestic France represents a relatively small percentage of sales and profits for continental European companies.
‘However, whatever our views on the outlook, we will maintain gearing within the prescribed range and we will continue to focus on attractively valued companies with strong balance sheets that should be resilient, and able to grow dividends, even in a more difficult environment.’
Fidelity European shares fell 2.4% to 377.23 pence each on Monday morning in London.
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