UPDATE 2-Schroders shares drop after first-half revenue lags

Thu Jul 31, 2014 4:54am EDT

Related Topics

* H1 AuM at 271.5 bln stg, up 15 pct from year earlier

* Revenue, Q2 inflows weaker, lag expectations

* Pretax profit 233.9 mln stg, FX hit of 18 mln stg

* Interim dividend up 50 pct to 24 pence

* Shares down 2.4 pct (Adds CEO quote, analyst reaction, shares, detail)

By Simon Jessop and Nishant Kumar

LONDON, July 31 (Reuters) - UK-listed fund manager Schroders posted first-half revenue on Thursday that lagged expectations, sending its shares lower even as assets under management hit a record high.

The sector has had a weak earnings season so far, with shares in Jupiter Fund Management and Aberdeen Asset Management both falling sharply this week after their results failed to live up to more positive market forecasts.

Schroders said that while the strong equity market gains of 2013 had not been maintained in the opening six months of this year, its assets under management still climbed 15 percent year-on-year to a record 271.5 billion pounds ($458.6 billion).

It attracted a net 4.8 billion pounds into its funds during the period, against 4.3 billion a year earlier, but second-quarter flows of 1 billion lagged consensus forecasts of around 2 billion as money left its commodity funds.

It also missed analyst expectations for revenue, net income and earnings per share, Thomson Reuters data showed, with revenue at 728.6 million pounds against a 730.8 million forecast.

"It was a mixed set of results. The top line was a bit weak around flows, although they made up for that on costs," said Bruce Hamilton, analyst at Morgan Stanley.

Shares in Schroders were down 2.4 percent at 0840 GMT in a flat FTSE 100 index.

While the second quarter was hampered by outflows from the company's institutional business, over the six months it took in 3.8 billion pounds from retail clients, mostly into its multi-asset and equity funds.

At the start of the third quarter, the company said it had seen good inflows from both institutional and retail clients and had a strong pipeline of unfunded institutional business, although this was offset by a more cautious retail outlook.

"We have a very strong pipeline of business we've won in institutional, by far the highest we've ever had, but which has not yet been funded," Chief Executive Michael Dobson said.

Pretax profit rose 6 percent to 233.9 million pounds over the six months, after an 18 million pounds hit due to the strength of sterling, and the company said it would pay an interim dividend of 24 pence a share, up 50 percent.

"It's quite a bit ahead of what the market was expecting and it reflects these strong results and the board's confidence in the long-term outlook," Dobson said.

($1 = 0.5911 British Pounds) (Editing by David Holmes)

FILED UNDER: