Insights

Soul Pattinson (ASX:SOL) share price jumps after 93% profit growth in FY21 results

Soul Pattinson shares start the day off well after its FY21 earnings release.
The post Soul Pattinson (ASX:SOL) share price jumps after 93% profit growth in FY21 results appeared first on The Motley Fool Australia. –

The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is in the green today after the conglomerate released its FY21 earnings.

Let’s take a closer look.

Soul Pattinson share price gains after robust earnings in FY21

Group Regular net profit after tax (NPAT) up 93% year on year to $328.1 million
Group profit after tax atttributable to members down 71% year on year to $273 million
Net asset value (pre-tax) at $5.8 billion, up 12% on the year
Net cash flows from investments reduced to $180.3 million, a 29% year on year drop
Total FY21 dividend of 62 cents per share, an increase of 3% from FY20.

What happened in FY21 for Soul Pattinson?

The Soul Pattinson share price is now changing hands at $37.24 apiece, a 4.5% jump from the open.

At first glance, it’s obvious there is a disconnect in group regular profit and group profit after tax attributable to members.

Soul Pattinson explains this is due to a one off “accounting gain” of $1.5 billion that was recognised in FY20, which made its profit figures appear abnormally larger last year.

The adjustment was due to Soul “derecognising” telco company TPG Telecom Ltd as an associate “after its merger with Vodafone”. Net cash flows from investments will also take a hit due to this same offloading, due to the lost dividends from TPG.

It adds that group regular profit is a “better reflection of the underlying performance of major investments” as it excludes one off items like the one described above.

As such, the group’s 93% gain NPAT was driven by growth in key investments in Soul’s portfolio.

Brickworks capitalised on the local building market’s strengths and contributed $82 million, a 95% year on year gain.

New Hope also contributed $61 million, a climb of 45% propelled by strengths in the coal markets.

Round Oak Minerals also benefitted from strengths in the broader commodity markets and generated $103 million in revenue for the company.

“Other investing activities” was a major performer also, increasing their contribution by 87% to $129 million, as “markets recovered from Covid-19 disruptions”.

Finally, Soul increased its dividend to 62 cents for FY21, a 3% gain over the year prior. This was completed with a final dividend of 36 cents per share.

Overall, it appeared to be a significant growth period for the group, with its major portfolio segments each growing substantially over the year. This could weigh in on the Soul Pattinson share price moving forward.

What did management say?

Regarding the group’s dividend increase, Soul Pattinson chair, Robert Millner proudly said:

One of the strengths of WHSP’s portfolio over the years is the way that the cash generation from assets has supported increasing dividends through any market conditions.

Extending praise on the dividend, Millner added:

While the cash generation was less than the prior year due to a large special dividend paid by TPG in FY20, the cash from the portfolio remains strong and has again supported increased dividends to shareholders. Total dividends paid by WHSP in FY21 represents 82% of Net cash flows from investments.

What’s next for Soul Pattinson?

Soul Pattinson’s managing director, Todd Barlow, acknowledged that “markets remain volatile”, and that there is a need to “constantly adjust portfolio allocations” with active management.

The company is also “very excited” about its upcoming merger with Milton. It says the blending of the two entities will “deliver a significant increase” to Soul Pattinson’s scale, and provide “additional liquidity to fund strong deal flow”.

It is also a diversification play for Soul, given its “higher cash generation” and “additional liquidity” to fund future investments.

Soul sees an additional $2 billion in liquidity from the deal to provide future investment financing.

The integration will also add “up to 30,000 new shareholders” and will result in a “significant increase in (Soul’s) market capitalisation”.

The Soul Pattinson share price has climbed 18% this year to date and has gained just over 50% over the past 12 months.

The post Soul Pattinson (ASX:SOL) share price jumps after 93% profit growth in FY21 results appeared first on The Motley Fool Australia.

Should you invest $1,000 in Washington H Soul Pattinson & Co right now?

Before you consider Washington H Soul Pattinson & Co , you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Washington H Soul Pattinson & Co wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

2 top quality ASX dividend shares offering reliable income growth

The Soul Patts (ASX:SOL) share price is down 3% on Friday
ASX 200 (ASX:XJO) midday update: Telstra unveils T25 strategy, Wesfarmers’ API offer

These were the best performing ASX 200 (ASX:XJO) shares last week

Soul Patts (ASX:SOL) share price hits record high amid copper spin-off rumours

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!