Abrdn leads to first-half losses as market turmoil dampens performance

FTSE 100 fund manager, Abrdn, posted losses for the first half of the year in the first six months of the year as the global market downturn and geopolitical uncertainty dragged down investment performance and dented investor confidence. private.

The Edinburgh-based investment firm on Tuesday posted a pre-tax loss of £320m, compared with a profit of £113m in the same period last year, while fee revenue fell 8%. The diluted loss per share was 13.9p, from earnings of 4.7p per share a year ago.

Abrdn said it expects the bleak outlook to improve in the second half, as tough market conditions show signs of abating and the contribution from acquisition of the Interactive Investor trading platform (ii) has begun. The deal, which aims to help the group join the UK’s growing army of retail investors, was announced in December but only began participating in the consortium about a month before the results were announced. temporary.

“In the second half of the year, we will see consistent revenue from the full six-month contribution from ii and from performance fees,” said CEO Stephen Bird. “The strategy we have laid out is right and we are working against it. . . The current market turmoil reinforces this logic. “

However, the share price fell 5% when the market opened in London, bringing the overall decline over the past year to 45%.

Assets managed and operated by the group fell to £508 billion, from £542 billion in the first half of 2021, although that was partially offset by assets flowing in from the second deal. . This decline was largely driven by the withdrawal of the investment trust of Lloyd’s Banking Group. Abrdn confirmed this will be Lloyd’s last withdrawal.

The rate of new customer growth in the second phase was rather lackluster, slowing to 19,000 in the first half of the year, far below the 47,000 people who signed up for the platform in the first half of 2021.

Abrdn, that rebranded from Standard Life Aberdeen in 2021, formed when the two fund managers merged in 2017. Since then the assets under management have declined and the combined market value of the group has shrunk.

“Almost all the key numbers are worse than the low expectations we or the consensus had. The company has also stated that their goals will now take longer to achieve and with the material addition lower the cost of restructuring the line,” said David McCann at Numis.

“We continue to think that a more radical strategy is needed to turn the team around and maximize value, such as breaking up the team or selling the entire team.”

The company said it would maintain a £300 million return program for shareholders and keep its dividend steady at VND7.3 billion.

“Now that acquisition ii is complete, and with our disciplined approach to allocating capital for shareholder return, we will continue to exceed our needs,” said Bird. business needs as the sale of shares continues”.

The company plans to further sell off its stake in joint ventures in HDFC’s insurance and wealth management businesses in India, “for value and at the right time,” Bird added.

Liquidation will be necessary to help Abrdn maintaining its capital buffer, RBC analyst Mandeep Jagpal said in a note, adding that the company’s “high structural cost ratio relative to its peers. . . profitability is more vulnerable to market downturns than peers”.

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