WPL has also been a strong holding within the Blue Chip portfolio but this has more been a function of the timing of our entry as WPL’s current operational experience is vastly different to that of Fortescue Metals (FMG).
Members entered WPL at around $21.65 in July and the stock has recovered to around $25.00 on the back of improving oil prices, but today’s profit update painted a picture of a company that is keeping things ticking over while it awaits a better environment.
WPL has a December year-end, and reported underlying net profit after tax (NPAT) of US$447m compared to over US$1bn in 2019. The headline numbers are even worse than that with numerous non-cash write-downs, but with higher oil prices WPL is now plotting a path out of the low-price environment. The board feels confident enough to declare a dividend of US$0.12 which is way down on the previous corresponding period (PCP). This will bring the payout of the last twelve months to US$0.38 fully franked which will probably not be enough to keep the stock in the portfolio in the next rebalance date (after the ex-dividend date).
