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Aberdeen profits plunge 40% on weak markets

Martin Gilbert BBCWeakness in emerging markets has led to a 40% plunge in first half profits at Aberdeen Asset Management.

Revenue fell 20% and underlying earnings per share by 41% as the company felt the brunt of the global market slowdown.

Martin Gilbert (pictured), chief executive, said: “These results reflect the challenging conditions Aberdeen has faced during the past three years, in particular the weakness in emerging markets.

“However our balance sheet strength has allowed us to continue to invest in the business, including the completion of a number of bolt-on acquisitions which have added new capabilities and new client channels.

“We have strengthened the management team with senior appointments in distribution and operations. Our broad product suite and global distribution platform means we are well placed to meet the long-term needs of an ever increasing number of investors around the world.”

Chairman Roger Cornick said the first half was “played out against a backdrop of ongoing fragile investor sentiment towards emerging markets, with this cyclical slowdown exacerbated by the effects of falling oil and commodity prices.”

He said the company was focused on the longer term and assets under management had increased, although investors were looking for “more evidence” that the outlook was improving.

“As we have reported before, our investment teams have not been distracted by these factors, and have remained focused on the aim of delivering the long term performance that our clients expect.

“It is encouraging to note that our equity portfolios have performed strongly against their respective benchmarks during the first four months of 2016 as investors have begun to focus once again on companies which had previously been undervalued by the market.

“However, this does not mean a dramatic improvement in new business flows is anticipated in the short term, as we recognise that many potential investors may need more evidence that this rotation is firmly established before investing.

“Gross new business inflows have continued at healthy levels, while outflows have moderated slightly. However, we remain vulnerable to further outflows over the next few quarters as clients continue to react to the difficult conditions for performance over the last few years.

“To some extent, these flows have been cushioned by the recent rally in markets and the net addition of assets from transactions completed in the period. As a consequence, total AuM at 31 March 2016 was £292.8 billion, a 3% increase compared to 30 September 2015.

“During the six months, we have added further strength to our management team to ensure we are equipped to respond to the changing needs and expectations of investors. We have recently announced the appointment of Campbell Fleming as Global Head of Distribution; Iain Plunkett has been appointed Chief Operating Officer in addition to his role of Chief Technology Officer; and Martin Jennings has joined us as Head of Digital, which will be a key focus as we move forward.”

Highlights:

• Net revenue £483.6 million (-20%)

• Underlying profit before tax £162.9 million (-40%)

• Underlying earnings per share 9.6p (-41%)

• Interim dividend per share unchanged at 7.5p

• AuM £292.8 billion

• £70 million of annualised cost efficiencies to be delivered during 2017



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