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Abrdn swings to loss and sees slower growth

Swinging to a loss: Abrdn’s growth has slowed

Asset manager Abrdn slumped to a £320 million half-year loss before tax as it took a hit from falling stock markets.

The Edinburgh-based company, formerly Standard Life Aberdeen, said the loss compared to a profit of £113m in the same period last year. It said its growth plans will take longer than expected.

Fee based revenue came in 8% lower at £696m and adjusted operating profit 28% lower at £115m, driven by market movements.

Shares in the company fell 9.23p (5.34%) to 163.7p.

“Current market uncertainty means our ambitions for revenue growth and improved cost/income ratio are likely to take longer than originally expected.” said the company.

It posted total net outflows of £35.9bn (H1 2021: £5.6bn) largely reflecting the final £24.4bn tranche of Lloyds Banking Group’s controversial withdrawal soon after Standard Life and Aberdeen Asset Management announced their merger in 2017.

Assets under management and administration fell to £508bn (FY 2021: £542bn) reflecting lower markets and the final LBG tranche withdrawal, partly offset by inclusion of AUA from interactive investor (ii) which Abrdn acquired in a £1.4bn deal.

The company declared an interim dividend of 7.3p.

Restructuring costs expected to be c£150m in FY 2022 (excluding corporate transaction costs). Additional restructuring costs associated with Investments vector cost actions expected to be broadly funded by proceeds from disposals of non-core assets.

ii is said to be performing ahead of the company’s profit expectations in H1 2022 and on track to deliver double-digit earnings accretion based on adjusted diluted earnings per share.

Chief executive Stephen Bird said: “The half year group results largely reflect the challenging global economic environment and market turbulence.

Stephen Bird: diversification

“When I became CEO in late 2020 I said that we would pursue a strategy of diversification by refocusing our Investments business in to areas of strength, where we have scale and that lean into global growth trends and also significantly expand our reach into the higher growth UK wealth market.

“We are doing exactly that and the addition of interactive investor transforms our UK retail presence and future revenue streams.

“The strength of our balance sheet means that we can continue to invest and reward shareholders.”

Market reaction

John Moore, senior investment manager at Brewin Dolphin, said he could see Abrdn slide out of the FTSE 100 unless it performs a quick turnaround.

“Today’s mixed set of results from Abrdn confirm the tricky position the company finds itself in.

“After a challenging year or so, between market turbulence and a restructuring of its business, Abrdn finds itself at the edge of the FTSE 100 having lost around -30% of its value since the beginning of 2022.

“The purchase of Tritax and Interactive Investor have reshaped the company and appear to be performing well, but there are some more strategic moves required to get the fund manager back on track. Abrdn seems certain to be relegated from London’s top index unless it can pull something out of the bag in the near-term.”

Comment: Abrdn’s slide will have predators circling

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