Jupiter European Opportunities’ results for the year ended 31 May 2016 have been published. The total return on the net asset value per share was 0.8 per cent. during the twelve months under review, which compares with a fall of 3.7 per cent. in the Company’s benchmark, the FTSE World Europe ex UK Index during the same period. Meanwhile the shares fell by 3.8 per cent. A resolution to declare a final dividend of 5.5p per share will be proposed at the Company’s AGM.
The manager’s report says the list of best performing stocks is headed by Grenke, the German leasing company, which continued to grow strongly as the mainstream banks retreated from what for them are non-core areas of their lending businesses. Grenke, with its clear, consistent and focussed strategy has clearly been a beneficiary of the significant challenges faced by the European banks. The other standout performer was Marine Harvest, the world’s largest salmon farming company. Its success is explained by increasing demand for salmon, especially in Europe, which has driven prices higher. Other notable contributors to performance were RELX and Fresenius. RELX (formerly Reed Elsevier, the publisher and information provider) grows as it builds on its strong technology platform and customers’ need for better information. Fresenius (healthcare including dialysis) continues to flourish especially in North America where pricing for its drugs remain very good. Two other contributors to performance illustrate an interesting macro point. The continuing success of Ryanair reflects not only a strong business model, but, along with other airlines, the benefits of lower oil prices. It is consumer spending rather than investment spending that is growing currently. The corollary of this is the poor performance of the banking sector. The fund has no direct exposure to the mainstream banks, a sector that has significantly underperformed. The lack of corporate lending growth combined with the ECB’s ultra low (or negative) interest rate policy has exposed the flaws in many of the banks across Europe. The German banking system, with its many subscale lenders, is in urgent need of reform.
On the negative side, the biggest single detractor to performance was Leonteq, the Swiss based provider of structured products and pensions solutions. Management problems together with slower revenue growth than expected have highlighted the challenges of this business. They have retained this position in the expectation that news flow, specifically new partnership agreements, will improve. Inmarsat was another significant negative performer. It is the leading mobile satellite operator in the world. The weakness of the maritime market, its core business, partly explains slightly slower earnings growth. However, the bigger factor weighing on the share price is the concern that Inmarsat will fail to win a good share of new aviation contracts. They retain confidence in the company and its strategy for winning aviation business. Syngenta’s shares performed poorly during the year however there was a significant improvement in the share price after the Company’s year-end, following the clearance of an agreed bid from ChemChina by the US committee which reviews national security implications of foreign investments in the US.
JEO : Jupiter European outperforms again