Pendal Group (the old BT Investment Management) saw its shares slide more than 13% at one stage yesterday after it revealed a worse than expected March 31 interim profit.
As a result, the company slipped its interim payout to shareholders by 9% or 2 cents a share to 20 cents.
In doing so the company joined the NAB in cutting dividend payments to shareholders because of the tough conditions and outlook for the finance sector. The NAB dropped its interim 16% to 83 cents, from 99 cents.
Pendal – which has slowly been separated from its one time parent, Westpac, said cash net profit slumped 26% to $84.5 million compared with the first half of 2017-18.
Statutory net profit after tax (dropped a larger 37% to $69.6 million in the latest half.
The shares ended the day down 12.99% at $8.04.
The global asset manager said its result was impacted largely by lower performance fees and said global markets were volatile, declining sharply in the December quarter before climbing in the March quarter.
“Although the start of our financial year coincided with one of the most difficult periods for markets since the global financial crisis, our business attracted strong institutional flows into our Australian equities, cash and fixed income strategies,” said chief executive officer Emilio Gonzalez.
“Despite the more difficult trading conditions, our strong balance sheet with no debt and good cash flow means the company is in a firm position to take advantage of opportunities to expand our capabilities and global presence, in line with our focused strategy around growth and diversification.”
The company said its “base management fee revenue during the period was down four percent to $237.6 million, as a result of a one percent decline in average Funds Under Management and a contraction in base management fee margin, which was down 2 basis points to 49 bps. (or 0.49%)”
Management also blamed the poor result on significantly lower performance fees, which plunged a massive 91% to $4.4 million.
Analysts though pointed to one small positive – its funds under management rose 2% to $100.9 billion by the end of March.
In a cautious outlook comment, Mr. Gonzalez said:
“The first half of 2019 was a challenging period for markets and investors. The market returns in the December quarter were the worst on record since the September 2011 quarter, and despite a rebound in market returns in the March quarter, the volatility over the half has led to a significant increase in risk aversion from clients. Any resolution to the US/China trade talks and clarity over Brexit should see investor confidence improve.
“Despite the more difficult trading conditions, our strong balance sheet with no debt and good cash flow means the company is in a firm position to take advantage of opportunities to expand our capabilities and global presence, in line with our focused strategy around growth and diversification.
“We remain focused on expanding our investment and distribution capabilities, maintaining a disciplined approach to managing capacity and providing ongoing support to our investment talent through our investment-led culture and business model.”
