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Djerriwarrh remains guarded despite doubling profit

IT MAY have more than doubled its annual net profit yet Djerriwarrh Investments expects a mixed performance from corporate Australia when listed companies report earnings next month.

IT MAY have more than doubled its annual net profit yet Djerriwarrh Investments expects a mixed performance from corporate Australia when listed companies report earnings next month.

The listed investment company reported a 127.4 per cent jump in net profit to $56.85 million for the year to June 30, from $25 million a year earlier.

Its total revenue climbed to $53.6 million from $34.11 million the previous year.

Djerriwarrh's board declared a final dividend of 16? per share, fully franked and unchanged from a year earlier, taking the total annual dividends to 26?.

Djerriwarrh's net profit more than doubled because of a low 2009-10 profit which resulted from subdued market volatility that year, combined with big cuts to dividends from companies and unrealised losses on investments.

The company is a long-term holder of large cap stocks and, in 2010-11, benefited from a recovery in dividends paid by companies in which it invests, especially banks.

Share buybacks by BHP Billiton and Woolworths also boosted its result. However, several headwinds will drag on the sharemarket's performance over the next six months and Djerriwarrh's general manager, Geoff Driver, said that recent profit warnings by retailers were not surprising.

"We've seen the savings rate go up, so from the consumer balance sheet perspective things are on a more solid footing," he said.

"But people are very cautious about spending money in the light of housing prices trading sideways or downwards, an equity market which is not producing much and slightly restrictive financial conditions."

Companies were likely to deliver a mixed performance when they reported annual earnings next month, he said.

"The ones that are exposed to the consumer or are impacted by the high Australian dollar are the ones we will be watching out for," he said. Net operating profit measures income generated from Djerriwarrh's investment, trading and options portfolios and in 2010-11 this increased 25.7 per cent to $54.9 million.

Earnings per share touched 26.58?, up from 11.86? a year earlier.

Djerriwarrh's $677.8 million investment portfolio is dominated by big names in the top ASX 50 stocks and its biggest holding is BHP Billiton, with the shares worth $100.5 million at June 30.

The portfolio returned 10.8 per cent in 2010-11.

During the year, it acquired shares in BHP, Commonwealth Bank, ANZ, AMP, Rio Tinto and Orica and offloaded shares in BHP, AXA Asia Pacific and Rio Tinto.


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