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UPDATE 2-Henderson warns of subdued retail investor market
August 17, 2011 / 6:44 AM / 6 years ago

UPDATE 2-Henderson warns of subdued retail investor market

* Interim dividends up 5 percent year on year

* Underlying profit 86.4 mln stg

* Further acquisitions ‘unlikely’ until 2013 - CEO

* Watching marketing, corporate entertainment costs (Adds further details, CEO and analyst comments, share price)

By Cecilia Valente

LONDON, Aug 17 (Reuters) - Anglo-Australian fund manager Henderson is bracing for further volatility in global stock markets and the challenge of keeping cash flowing in as retail investors fight shy of investments for a few months.

Chief Executive Andrew Formica said the dramatic stock falls seen in recent weeks had spooked investors, and its effects would not be forgotten in a hurry.

“Even if markets return to the highs of the year, we think the psychological effects of market movements seen in the last few weeks will likely deter retail investors in particular from investing at a similar pace (to that) we have seen over the past few years,” Formica told a conference call.

Henderson reported 86.4 million pounds ($141.8 million) underlying profits before tax for the first six months of the year on Wednesday, in line with its own estimates published last month, and said it would pay interim dividends of 1.95 pence per share, compared with 1.85 pence paid last year.

Previously reported assets under management were confirmed at 74.4 billion pounds.

Analysts at Numis expected interim dividends to amount to 2 pence, while their counterparts at Peel Hunt have forecast dividends to remain unchanged.

Retail investors accounted for the only inflows the group recorded in the first half of the year. It attracted 285 million pounds net inflows from clients such as retirement savers and private individuals, while institutional investors and insurer Phoenix withdrew around 3.1 billion pounds.

Formica said it would be “prudent” in these brittle markets to keep an eye on costs but added Henderson was not looking at staff redundancies. Instead, the company was making sure its spending habits were “consistent with a maybe more difficult outlook”.

“Travelling and entertainment, marketing, any operating costs such as what you are spending in your IT area, new recruitment in areas where if you do not see growth you would expect, you could hold back on,” he told reporters.

The company’s shares were trading down 1 percent at 140.6 pence at 0923 GMT, roughly in line with a 0.71 percent dip in the FTSE 250 index . Analysts at Numis gave the stock a ‘reduce’ rating, but said Henderson shares had held up much better than rivals from July to date. Analysts at Peel Hunt retained their ‘hold’ rating.

Concerns about the euro zone’s and the United States’ debt burdens have rocked the markets in the last two weeks, hitting global markets and leaving fund managers nursing heavy losses and scrambling to soothe nervy clients.

Formica said some investors were exploiting the volatile markets to buy equities at bargain prices, but they remained a minority.

ACQUISITIONS ON ICE

Formica also said Henderson was not looking for further acquisitions until 2013 and was instead concentrating on extracting “the full benefits” of the Gartmore takeover.

“I would dampen down any enthusiasm that we would do anything in the short to medium term ... Medium term would include 2012,” Formica said.

He said Henderson was using its spare cash for the integration and to pay 142 million pounds debt maturing next May. He said there was no plan for share buybacks either. ($1 = 0.609 British Pounds) (Editing by Sinead Cruise and Will Waterman)

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