Portfolio Update

The information contained in this release was correct as at 31 July 2022. Information on the Company’s up to date net asset values can be found on the London Stock Exchange website at:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. 

BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC (LEI - 5493003R8FJ6I76ZUW55)

All information is at 31 July 2022 and unaudited.

Performance at month end with net income reinvested
 

	One Month	Three Months	One Year	Three Years	Launch (20 Sep 04)
Net asset value (undiluted)	9.5%	-2.7%	-21.8%	29.3%	585.7%
Share price	9.2%	-7.0%	-28.8%	25.1%	543.0%
FTSE World Europe ex UK	5.1%	-2.2%	-7.0%	14.5%	327.7%

Sources: BlackRock and Datastream
 

At month end

Net asset value (capital only):	499.13p
Net asset value (including income):	504.51p
Share price:	468.00p
Discount to NAV (including income):	7.2%
Net gearing:	0.0%
Net yield1:	1.3%
Total assets (including income):	£516.1m
Ordinary shares in issue2:	102,300,411
Ongoing charges3:	1.02%

1  Based on a final dividend of 4.55p per share for the year ended 31 August 2021 and an interim dividend of 1.75p per share for the year ending 31 August 2022.
2  Excluding 15,628,527 shares held in treasury.
3  Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2021.

Sector Analysis Total Assets (%) Industrials 21.7 Health Care 21.1 Consumer Discretionary 18.6 Technology 15.9 Financials 11.4 Consumer Staples 6.2 Basic Materials 3.4 Net Current Assets 1.7 ----- 100.0 =====

Country Analysis Total Assets (%) Denmark 19.9 Netherlands 17.3 Switzerland 17.2 France 13.9 United Kingdom 7.0 Sweden 6.6 Italy 5.9 Belgium 2.5 Spain 2.4 Poland 1.6 Greece 1.5 Germany 1.4 Ireland 1.1 Net Current Assets 1.7 ----- 100.0 =====

Top 10 holdings	Country	Fund%
Novo Nordisk	Denmark	8.3
ASML	Netherlands	7.7
LVMH Moët Hennessy	France	6.7
RELX	United Kingdom	6.0
Lonza Group	Switzerland	5.5
DSV Panalpina	Denmark	5.1
Royal Unibrew	Denmark	3.9
Sika	Switzerland	3.5
IMCD	Netherlands	3.5
Hermès International	France	3.4

Commenting on the markets, Stefan Gries, representing the Investment Manager noted:

During the month, the Company’s NAV rose by 9.5% and the share price by 9.2%. For reference, the FTSE World Europe ex UK Index returned 5.1% during the period.

Europe ex UK markets rallied during July, recovering some of the losses from previous months. Hopes that central banks, particularly the Federal Reserve, will make a policy pivot later in the year played a role in boosting equities. Markets also rewarded reassuring company results and higher quality assets took the lead over value assets. Industrials, IT and consumer sectors saw the strongest returns while telecommunications and energy lagged the rally. However, inflation prints remained high over the month and there are still some major question marks around the energy supply from Russia to Europe going forward.

The Company outperformed its reference index during the month, largely driven by accurate stock selection while sector allocation was also strong. In sector terms, the Company’s lower weight to telecommunications and financials was positive. A higher exposure to technology and industrials also aided returns. However, the Company’s higher allocation to the health care sector contributed negatively as more defensive sectors lagged the market rally; however, this was significantly offset by strong stock selection.

During July, the portfolio benefited from its high conviction stocks that are experiencing resilient trends and delivered solid corporate results. The top performer in July was Danish freight forwarder DSV. DSV delivered stellar H1 results with gross profit growing 61% year-on-year, an 8% beat versus consensus. The full year EBIT target was raised by 9% to 23-25bn DKK - this follows an earlier raise after Q1. Their outlook is more cautious, expecting freight rates to normalise and demand to soften alongside lower forecasted GDP growth. However, productivity gains expected to be recognised into 2023 and M&A opportunity, continue to be levers to offset a period of normalisation.

Shares in the portfolio’s semiconductor-exposed names were rewarded by overall robust results and confirmation of a strong demand environment. Trends our companies are exposed to such as global efforts to move to electric vehicles, as well as automation in several industries, continue to drive demand.

ASML was amongst the best performers. Q2 orders hit another record high, although sales guidance for the remainder of the year was cut due to delayed revenue recognition and timing of shipment. However, the market was relieved that management commentary around demand was positive and we believe the semiconductor companies we are invested in are able to outgrow their respective end markets.

Similarly, ASM International contributed positively as revenues increased 30% year-on-year. Markets were impressed by its strong order intake during the quarter and assuming some improvement in supply chains, management expect revenue to grow further from here.

Stock selection was strongest within health care. Lonza reported Q2 results showing top line growth of 17%, broadly in line with guidance, while their EBITDA margin of 33.1% exceeded consensus expectations. Guidance has been maintained and an encouraging capex update was given supporting strategic plans to have a ‘fill and finish’ site that gives Lonza the ability to offer end-to-end drug manufacturing and production from 2026. Elsewhere in the sector, owning Chemometec also aided returns, as did not holding Roche.

During the month, the portfolio also benefited from strong results within the luxury sector. Hermes for example outperformed following very strong H1 results, posting record profitability. The Birkin bag maker delivered beats versus expectations across all product categories and geographies, including resilience from Asia despite Covid restrictions in China for some of the period.

Shares in LVMH also did well as the company recorded revenue of €36.7bn in the first half of the year, up 28% compared to the same period in 2021. Chinese lockdown related impacts were offset by strong tourism in Europe and robust sales in the US.

The single largest negative contribution came from our position in Polypeptide. The company warned they were expecting a drop in profitability in the first half of 2022 versus the first half of 2021. While last year was a particularly strong year for the group, this set a tough comparative base which combined with adverse impacts from higher input and wage costs led to a miss on earnings expectations for 2022.

Royal Unibrew shares also gave up recent gains after some more cautious earnings previews were released ahead of their results in mid-August. Despite rapid moderation in input costs, raw materials continue to eat into strong top-line growth and are expected to put pressure on margins for the next few quarters. Despite this having put pressure on shares in the short term, our long-term view is still intact where we see EBIT growth likely to exceed 10% organically for the next few years.

At the end of the period, the Company had a higher allocation than the reference index towards technology, health care, industrials and consumer discretionary. The Company had an underweight allocation to energy, utilities, financials, consumer staples, telecoms, real estate and materials.

Outlook

So far 2022 has been challenging, with concerns over the economic implications of the Russian invasion of Ukraine, rising interest rates and continued supply chain disruptions weighing on equity returns. We are incrementally more cautious on the environment but see opportunities for attractive returns in select areas. Large amounts of fiscal spending via the Recovery Fund, Green Deal and the REPowerEU Plan in Europe can drive demand for years to come, for example in areas such as infrastructure, automation, the shift to electric vehicles, digitisation, renewables or the refurbishment of building stock. We believe the portfolio is well aligned to many of these spending streams.

We continue to stay close to our companies which allows us to understand the environment they are operating in. We expect greater dispersion between sector and stock outcomes and with that a need for greater selectivity. In our view this will favour well-managed, well-organised businesses with an element of pricing power and we believe that holding these businesses will benefit our shareholders over the medium to long term.

16 August 2022

ENDS

Latest information is available by typing www.blackrock.com/uk/brge on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.