JPMorgan European Smaller Companies, chaired by Carolan Dobson (pictured), has announced its interim results for the six-months ended 30 September 2015. During the period, the trust provided a total return of 2.4% outperforming the company’s benchmark, the Euromoney Smaller European Companies (ex UK) Index, which lost 3.8% in total return terms. The company says that the outperformance was due principally to good stock selection. The share price return was +0.7%, however the discount at which the Company’s shares trade widened from 13.0% at the end of the last financial year to 14.4% at 30th September 2015. The dividend policy is to pay out the vast majority of revenue available each year and the Board has decided to pay an interim dividend of 1.2p per share (2014: 1.2 pence), which will be paid on 15th January 2016 to shareholders on the register as at 18th December 2015.
The manager’s say that, somewhat unusually and because of very volatile markets, they had a small negative impact on performance from gearing. Faively, a French manufacturer of train components, was approached by a larger US competitor willing in principle to offer more than a fifty percent premium, while OVS, the largest Italian apparel retailer, continued to perform strongly following its initial public offering. Stroer, a German billboard advertising company, and Trigano, a French manufacturer of motor vehicle homes, both benefited from a strong pick up in European consumer demand. All of these contributed positively to performance. Detractors during the period included the Italian cement producer Cementir (the manager’s say that this was because of its exposure to Turkey), the Swiss private bank EFG International (due to poor cost control and Elis in the manager’s view), the French textile cleaning provider (the managers say it faced a price war in France).
In terms of outlook, the managers comment that, while there does indeed seem to be a slowdown in globally exposed industrial and consumer companies, the good news is that for now companies exposed to Europe and more especially the European consumer are doing well in their opinion. The managers believe that Europeans are enjoying the benefits of low oil prices and interest rates at a time when the benefits of economic reform in peripheral Europe are increasingly evident in their economic renaissance. The managers say tghat consumer confidence indices in countries like Italy are the highest we have seen since 2001.
The managers say they have accelerated the process of focusing on high quality, well managed companies either exposed to the revival in European consumer confidence or companies that are generally less correlated with global economic trends. While the macro economic outlook may be uncertain they feel confident in the management teams and business models of the companies they are invested in.
JPMorgan European Smaller Companies beats benchmark on the back of good stock selection : JESC