3i Group (LSE: III) increased its annual dividend despite a fall in profits, driven by a strong performance from its portfolio company, discount retailer Action.
3i’s total return for the year ended March 31st was £3.84 billion, down 16% year-on-year. However, the company’s net asset value rose to 2,085 pence per share from 1,745 pence.
While overall operating profit dipped 16%, 3i declared a second dividend of 34.5p per share, bringing the total payout to 61.0p, a 15% increase year-on-year.
The company credited the strong results to Action’s continued success. Action, the largest company in 3i’s portfolio, is Europe’s fastest-growing non-food discount retailer and generated a gross investment return of £3.72 billion for 3i.
While the Private Equity business saw an 18% decline in gross investment return, 3i remains confident. CEO Simon Borrows believes the company’s portfolio is well-positioned for the current economic climate.
Despite the positive outlook, 3i’s shares fell 3.4% on Thursday morning.
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