3i Group updated the market on its portfolio on Monday, reporting that its investments were making “good progress” amid “more challenging” markets.
The FTSE 100 company said that in its private equity portfolio, assets in the value-for-money consumer, healthcare, speciality industrial and business and technology services sectors had generated “strong” earnings growth, and had “good momentum” heading into the second half.
It said it also saw a sustained increase in demand across the travel-related assets in the portfolio.
“Assets exposed to discretionary spending continue to see headwinds but we have been encouraged by the pricing power shown by a number of the more challenged companies and the ability of our management teams to use other levers in their control to partially mitigate rising energy costs, other inflation impacts and weaker consumer sentiment,” the board said in its statement.
“International investments – non-sterling – account for 87% of 3i’s investment portfolio.”
The board said the “impressive performance” of its continental Europe discount retailer Action had continued, with “very strong” sales and EBITDA growth.
It said year-to-date sales at more than €5.8bn were now over 26% ahead of the same period last year, with strong trading continuing across all geographies.
“The Action team continues to execute its strategy well and the business continues to attract significant new customer flow through very low prices and good product availability in store.
“We expect EBITDA for the last 12 months to the end of P9 to be circa €1.04bn compared to €765m at September last year, and €506m at September 2019.”
Cash generation at Action continued strongly, 3i reported, with net debt now standing at less than 2.1x run-rate EBITDA.
“Action has now opened 142 new stores in 2022 and remains on track to open more new stores than in 2021.
“Action’s energy costs for 2022 are estimated to total less than 0.4% of sales.”
At 0840 BST, shares in 3i Group were up 2.34% at 1,113p.
Reporting by Josh White at Sharecast.com.
