LONDON (Alliance News) - Impax Environmental Markets PLC on Thursday declared a significant increase in its dividend but said it underperformed against both its comparative indices in 2018 due to a poorer performance from smaller companies.
Impax Environmental invests largely in quoted companies that are involved in environmental markets, such as alternative energy, water treatment, and pollution control.
The company's net asset asset value total return per share was negative 10.8%, well behind the MSCI AC World Index's negative 3.8% return and the FTSE ET100 Index's negative 9.9% return, which it blamed on "the global weakness of smaller companies".
Impax Environmental's net asset value as at December 31 was 249.59 pence per share, down 11% from 281.55p per share the year before.
The company's share price at the end of the year stood at 253.0p, representing a 1.4% premium to NAV.
Shares in Impax Environmental were down 0.7% at 291.10p on Thursday afternoon.
In terms of individual companies that detracted from its performance, packaging company DS Smith PLC and food service equipment supplier Welbilt Inc were named.
"Concerns around global growth and volatility in global equity markets in the final three months of 2018 caused a weakness in more indebted stocks. DS Smith was marked down, along with other fibre-packaging firms. Welbilt suffered due to its debt burden and its third quarter results missing sell side analyst expectations, leading to lower guidance on its annual operating margins and earnings. Despite short term market concerns over these companies, our conviction in their medium-term prospects remains and we have retained them in the portfolio," said Impax Environmental's manager, Impax Asset Management AIFM Ltd.
The investor also noted the slowing of the LED lighting market and increased margin pressure in the industry due to competition. Impax Environmental has cut its exposure to the LED market to two companies from three.
Impax Environmental has declared a 3.00p per share dividend, up 20% from 2.5p paid in 2017.
"We have had a strong start to 2019, catching up on a significant proportion of the end of 2018's underperformance relative to the MSCI ACWI, but we do think market volatility, as seen at the end of 2018, could continue in 2019," said Impax Asset Management AIFM.
"We expect the changes we have seen in investor sentiment to continue and as a result we expect to see attractive long-term investment opportunities. We see parallels between today and other periods in the past, where market returns across sectors varied substantially. Looking ahead, [Impax Environmental Markets] will continue to choose to be positioned in more defensive businesses relative to the FTSE ET100, with an emphasis on diversification, and will seek to invest in companies with quality management teams delivering sustainable and above market returns," the manager added.
Impax Asset Management (IEM)
Smith (DS) (SMDS)