Asset manager Schroders has rallied from a poor first quarter caused by tariff turmoil, through strategic investment in line with its three year transformation plan.
Assets under management (AUM) remained stable at £776.6bn, down slightly from £778.7bn recorded the previous year, as improved performance and investment of £24bn was offset by foreign exchange movements due to the dollar weakening.
Average AUM, excluding JVs and associates, increased by 3 per cent to £662.2bn, while performance fees and net carried interest rose to £20.7m, resulting in a net operating revenue increase to £1.2bn.
Gross inflows increased by 8 per cent to £68.2bn, while adjusted operating profit rose by 7 per cent from £294.1m to £316m.
Statutory profit before tax took a hit, falling from £276.3m to £196.9m as it felt the impact of portfolio restructuring charges and transformation charges.
Transformation plan
As part of plans to adjust its portfolio, the firm exited its real estate business in Munich and private credit business in Australia, while it restructured its businesses in South Korea and China. The company also wrote of its investment in a US credit originator.
The changes are part of the firm’s three year plan to save £150m and return to profitable growth.
The firm acknowledged its good progress against the transformation programme, as operating expenses reduced by £21m, while it continued to reinvest, with £8m invested into selective hiring across the firm and in the development of its active ETF programme.
Strong performance across the arms
The firm’s asset management arm recorded a net operating income of £940.2m up from £934.9m the prior year, as its public market business delivered a strong performance in global equities.
The wealth management arm delivered £1.6bn of net new business, in line with the firm’s annual 5-7 per cent target, with acquisition Benchmark delivering a third of the arm’s net flows, while completing further acquisitions.
Wealth management AUM increased to £145bn, while net operating revenue increased 9 per cent to £258.3m from £235.9m, as a result of improved efficiencies and reduced-third party costs, driven by acquisitions.
The company updated its expectation for the full year, following the strong early progress of its transformation plan, to deliver an in-year cost reduction of £50m.
The Board will not alter its interim dividend, remaining at 6.5p per share.