Henderson International Income (HINT) announced results for the half-year ended 28 Feb 2023. During the six month period, the net asset value total return per ordinary share was 2.2% (debt at par) and 2.8% (debt at fair value). The company’s return on the ordinary share price was 6.5%. This included dividends totalling 3.7p per share (2022: 3.6p), an increase of 2.8% year on year. The total return of the company’s benchmark index (MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted)) was 0.5%.
The returns continue a solid period for the company with shares up 12.6% over the past year, and 31.3% over the past 3 years, although 3-year performance is virtually inline with benchmark returns.
Commenting on markets during the 6-month period, chairman Richard Hill noted:
“Over the period, inflation has proved to be more persistent than policy makers had expected, and central banks have reacted by raising interest rates more than markets had predicted. The US Federal reserve increased rates by 2.25%, the Bank of England by 2.75% and the European Central Bank by 2.5%. These increases have created problems for bond markets and business models that relied on plentiful debt at low interest rates, as illustrated by recent high-profile bank failures and difficulties within the property sector. Nevertheless, there have been some positive developments that are helping economies to offset the immediate impact of these higher interest rates. These include the once feared “winter energy crisis”, which in the event did not transpire, China’s abandonment of its zero Covid policy and employment levels remaining high around the world. Together, these developments have helped equity markets recover from last year’s lows. Europe was the strongest performing equity market, aided by lower energy prices and the year-on-year benefit of an absence of Covid lockdowns. Japan and the US markets also recovered. Sterling rallied over the period, slightly dampening the returns from overseas equities for UK investors.
“The Company’s portfolio is diversified and with its focus on investments with attractive valuations and secure balance sheets it has largely avoided the areas of the market most impacted by rising interest rates. Our emphasis on cash generation to finance investment and shareholder returns has allowed portfolio companies to deal with higher borrowing costs and even, in some cases, to gain market share. At a Company level, the earlier decision in 2019 to secure fixed borrowing for over 20 years means there is no risk of higher borrowing costs for shareholders.”
Regarding the outlook, he continued:
“The Covid pandemic and Ukraine conflict were globally significant economic and humanitarian events. The disruption they caused makes it difficult to discern what the real economic and supply/demand trends currently are across a range of important variables, including inflation, commodity prices, demographics and consumer spending. As a result of this uncertainty, investors remain understandably cautious and have derated many sectors and regions of equity markets, causing some to trade at low valuations compared to history.
“The board and the fund manager remain focused on delivering the Company’s investment objectives and will continue to follow its existing strategy of identifying attractively valued companies that have the capacity to grow their earnings and dividends over the medium to long term. The diversified nature of the Company’s portfolio provides investors with a wide range of exposure to different industries and global regions which is both beneficial and appropriate in these uncertain times.”
HINT : Henderson International Income continues to see good progress