Washington H. Soul Pattinson warns of profit hit

Washington H. Soul Pattinson expects to suffer a sizeable hit to its half-year profit.

Washington H. Soul Pattinson CEO Todd Barlow Picture: John Feder

Washington H. Soul Pattinson expects to suffer a sizeable hit to its half-year profit after flagging lower earnings from its coal, mining, construction material and telco investments.

The conglomerate said its statutory net profit after tax would plunge to between $45m and $55m for the six months to January 31, from $179m a year earlier. Regular profit, excluding non-regular items, would drop to between $120m and $130m, from $186m.

Soul Pattinson’s bulging investment portfolio includes major stakes in Brickworks, TPG Telecom, New Hope Coal, Round Oak Minerals and a collection of investment companies.

While Brickworks has yet to issue its half-year result, the ­nation’s largest brickmaker owns a stake in Soul Pattinson, which will damage its profit. Under the arrangement, Brickworks holds a 39.4 per cent stake in Soul Patts and Soul Patts owns a 43.83 per cent stake in Brickworks.

TPG saw its underlying profit tumble 30 per cent as its customers migrated onto the NBN.

Coal producer New Hope has also yet to produce its half-year result but its first-quarter revenue was down 51 per cent as coal ­prices slumped.

Soul Pattinson also flagged the poor performance of Round Oak Minerals as a result of falling zinc and copper prices in a statement issued after the market closed on Wednesday.

“Soul Pattinson does not consider its earnings to be the key ­indicator of the company’s performance,” the statement said. “As with any investment portfolio, the key drivers of success are growth in the capital value of the portfolio and a growing yield.”

It expects to pay an increased interim and final dividend, noting it declares its payout from the cash it receives from the portfolio rather than accounting earnings.

“The regular cash received by WHSP from its investments for the 2020 financial year is expected to be in line with the previous year and will support our ability to pay a growing interim and final dividend,” the company said. Its shares fell 2.7 per cent to $18.78.