Standard Life Aberdeen profit down 10%, eyes 'turbulent' 2020

LONDON (Reuters) - British asset manager Standard Life Aberdeen SLA.L said its full-year profits fell 10% after revenues were hit by outflows and warned of a turbulent market outlook given the volatility sparked by the coronavirus outbreak.

FILE PHOTO: The offices of Standard Life Aberdeen in Saint Andrew Square Edinburgh, Scotland, Britain February 15, 2019.REUTERS/Russell Cheyne

Market moves on Monday were evidence of "pure panic", effectively pricing in a global recession, Chief Executive Keith Skeoch told journalists. The S&P500 .SPX posted its biggest one-day fall since the financial crisis as global equity markets plunged and investors scurried to safe-haven assets.

However, a successful response to the virus by governments, including through fiscal stimulus, could see its impact reduced to a short, sharp economic shock with recovery in as little as six months, he added.

Another wild card was the effect of sharply lower oil prices on demand, as it effectively worked as a tax cut for consumers.

“Asset prices are suggesting a global recession is around the corner, (but) I think it is too early to be certain... we need to see how long the virus lasts, the extent of any government stimulus and whether this oil price persists.”

As part of the company’s response to the spread of the virus, Skeoch said it had split its investment and other teams in Asia into ‘red’ and ‘blue’ groups, with some operating from the office and some from home.

From this week, it would roll the plan out to teams in Britain and the United States, making use of alternate office locations and increased home-working.

Despite improved flows in the second half of 2019, fee-based revenue fell 13% to 1.63 billion pounds amid outflows of 17.4 billion pounds, largely from equities and multi-asset products. Outflows in 2018 were 40.9 billion pounds.

As a result, pretax profit, adjusted for restructuring costs and impairments, fell to 584 million pounds from 650 million, it said in a statement.

At 0905 GMT, shares in Standard Life Aberdeen were up 2.7%, broadly in line with a 3% gain in the FTSE 100 .FTSE.

Rival M&G MNG.L on Tuesday also reported net outflows from its savings and investments arm.[nL8N2B31KA]

Formed through the 2017 tie-up of Scottish insurer Standard Life and Aberdeen Asset Management, a defensive move in the face of rising industry costs and pressure on fees, the company embarked on a major restructuring that it has yet to complete.

However, the company said it now expected to deliver 400 million pounds in annualised cost savings, with 350 million pounds by the end of 2020 and an extra 50 million during 2021, with most of the fresh savings unrelated to staff costs.

Reporting by Simon Jessop, editing by Sinead Cruise, Kirsten Donovan