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Shares in British asset manager abrdn slide on profit miss
Global Banking & Finance Review®
Company
By Sinchita Mitra
(Reuters) -British asset manager abrdn said on Tuesday it would take longer to grow its revenues and boost profitability after half-yearly profit missed expectations on turbulent markets and inflationary pressures, sending its stock at the bottom of FTSE 100.
Fund managers, which saw their assets under management reach record highs during the pandemic, are now witnessing an increase in outflows, as cautious investors shun riskier investments amid soaring inflation.
Market uncertainty “means our ambitions for revenue growth and improved cost/income ratio are likely to take longer than originally expected”, the group said in a statement.
The fund manager had forecast a cost-income ratio of 70% in 2023, which it said will now likely be delayed.
“The backdrop remains very uncertain. We are focusing on what we can control as we continue the execution of our strategy,” said Chief Executive Stephen Bird in a media call.
Shares in abrdn were down 3.5% at 166.95p by 0825 GMT.
London-listed abrdn’s assets under management and administration stood at 508 billion pounds ($614.58 billion) at the end of the first half, down from 542 billion pounds at the end of last year.
A company-compiled analyst poll had forecast AUMA at 522 billion pounds.
British insurer Legal & General on Tuesday reported a 3% drop to 1.29 trillion pounds in its assets under management from a year earlier.
Abrdn’s adjusted operating profit came in at 115 million pounds for the half-year ended June 30, compared with 130 million pounds expected.
The asset manager, which flagged higher costs in its investment unit due to rising inflationary pressures, said it now expects restructuring costs to reach about 150 million pounds by the end of 2024.
“The high proportion of structural costs relative to peers leaves abrdn’s profitability more susceptible to market downturns than peers,” said analysts at RBC.
The company saw its net outflows rise to 3.8 billion pounds from 1.9 billion pounds reported last year.
($1 = 0.8266 pounds)
(Reporting by Sinchita Mitra in Bengaluru; Editing by Subhranshu Sahu and Jan Harvey)
Asset management is the process of developing, operating, maintaining, and selling assets in a way that maximizes their value. It involves managing investments on behalf of clients.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
The cost-income ratio is a financial metric that compares a company's operating costs to its income. A lower ratio indicates higher efficiency in managing expenses relative to income.
Assets under management (AUM) refers to the total market value of assets that an investment company or financial institution manages on behalf of clients.
Net outflows occur when more money is withdrawn from an investment fund than is deposited. This can indicate a lack of investor confidence or market challenges.
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