IGM first-quarter profit misses estimate as expenses rise

TORONTO Fri May 9, 2014 11:56am EDT

TORONTO May 9 (Reuters) - IGM Financial Inc, one of Canada's top mutual fund companies, said on Friday that first-quarter net earnings and assets under management both rose, but their quarterly profit missed expectations as expenses jumped.

Shares of the Winnipeg, Manitoba-based company slipped after it reported net earnings of C$194.4 million ($178.3 million), or 77 Canadian cents a share, in the quarter, down from a year-earlier profit of C$180.5 million, or 72 Canadian cents.

Analysts were expecting a profit of 80 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Assets under management reached a record high during the quarter, rising 9.1 percent to C$137.3 billion at the end of March 31, compared with C$125.8 billion a year earlier.

But expenses were up more sharply, rising 10.3 percent to C$461.7 million in the quarter from the same period a year ago.

Shares of IGM were down 30 Canadian cents at C$54.12. IGM Financial is a division of the Desmarais family's Montreal-based Power Corp.

Barclays Capital analyst John Aiken said the slight miss against expectations and the stagnant dividend at IGM may drag on the share price, but mutual fund sales should improve in 2014 as investments perform well.

"While we would expect some relative softness in IGM's share price, the positive net sales trend that is emerging likely means that earnings growth should resume going forward. Further, IBMs current 4 percent dividend yield remains compelling and should provide downside support," Aiken said in a research note. ($1 = 1.0905 Canadian dollars) (Reporting by Andrea Hopkins, editing by G Crosse)

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