SHRS : Dollar weakness food price competition restraining Shires Income
Over the six months that ended on 30 September 2014 Shires Income generated a 1.6% return on net assets – just ahead of the 1.2% return on the FTSE All-Share Index. It moved from trading at a 1.6% premium to a 1.8% discount however and so the return to shareholders was -1.8%.
They didn’t add to their holdings of preference shares during the period but these performed well and so these became a larger part of the portfolio. The weakness of the dollar was problematic for Shire’s income generation but they say the proportion of companies in the portfolio producing dollar revenues is lower than for the UK market as a whole. Food retailers seem to have been a problem with Tesco’s dividend cut and they also said intense competition in the food retail sector at a time of weak consumer demand led companies like Morrisons to struggle and they have sold their holding.