Power Corporation’s Publicly Traded Companies Had Decent Q4, but Stand-Alone Businesses Struggled

The fourth-quarter results of no-moat Power Corporation of Canada were marked by a decent performance from its publicly trading operating companies, but other stand-alone businesses struggled. The firm reported adjusted net earnings of CAD 394 million or CAD 0.59 per share in fourth-quarter 2022, compared with CAD 676 million or CAD 1.00 per share in the fourth quarter of the previous year. Adjusted earnings from the publicly listed operating companies (Great-West Lifeco, IGM Financial, and Groupe Bruxelles Lambert) were reported at CAD 741 million in the fourth quarter compared with CAD 702 million in the previous year. Overall, results of the holding company were hit by CAD 160 million of negative contributions from Power Sustainable and a CAD 109 million impairment charge on Lion due to a significant decline in its market value. The holding company increased its quarterly dividend to 52.50 cents per share, an increase of 6.1%, which is in line with the recently announced dividend increase by Great-West Lifeco. We are maintaining our CAD 40 fair value estimate for the firm after incorporating fourth-quarter results.