(Alliance News) - Shares in abrdn fell early Tuesday after the asset manager reported a swing to loss and lowered its outlook, saying it feels the current market volatility will see it take longer to hit its revenue growth and cost-to- income ratio targets.
abrdn's Investment unit ended the first half with assets under administration of GBP386 billion, sinking 17% from GBP464 billion at the same point a year prior. It recorded GBP37.3 billion in net outflows.
abrdn booked a GBP320 million loss in the six months to June 30 versus the GBP113 million profit achieved a year prior. Fee-based revenue fell 8% to GBP696 million from GBP755 million, and its cost-to-income ratio worsened to 83% from 79%.
abrdn left its interim dividend unchanged at 7.3p. It also confirmed its dividend policy remains unchanged. abrdn said it has launched a GBP150 million share buyback as part of its GBP300 million shareholder return programme.
"The half-year group results largely reflect the challenging global economic environment and market turbulence," said Chief Executive Officer Stephen Bird.
"When I became CEO in late 2020, I said that we would pursue a strategy of diversification by refocusing our Investments business in to areas of strength, where we have scale and that lean into global growth trends and also significantly expand our reach into the higher growth UK wealth market. We are doing exactly that."
Bird pointed to the acquisition of retail investment platform interactive investor. abrdn said ii performed ahead of its profit expectations in the first half and is on track for double-digit earnings accretion based on adjusted diluted earnings per share.
abrdn bought ii for GBP1.49 billion, completing the deal in May.
abrdn shares were down 5.0% early Tuesday in London, the worst FTSE 100 performer.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,477.66
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Hang Seng: down 0.1% at 20,029.37
Nikkei 225: closed down 0.9% at 27,999.96
S&P/ASX 200: closed up 0.1% at 7,029.80
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DJIA: closed up 29.07 points, or 0.1%, at 32,832.54
S&P 500: closed down 0.1% at 4,140.06
Nasdaq Composite: closed down 0.1% at 12,644.46
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EUR: down at USD1.0201 (USD1.0217)
GBP: down at USD1.2075 (USD1.2114)
USD: up at JPY134.93 (JPY134.61)
Gold: down at USD1,785.10 per ounce (USD1,789.50)
Oil (Brent): down at USD95.89 a barrel (USD96.22)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's key economic events still to come
UK Swati Dhingra becomes external member of BoE Monetary Policy Committee
0830 EDT US preliminary productivity & costs
0855 EDT US Johnson Redbook retail sales index
1630 EDT US API weekly statistical bulletin
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Taiwan held an artillery drill on Tuesday, simulating defence against an attack as its top diplomat accused Beijing of preparing to invade the island after days of massive Chinese war games. China launched its largest-ever air and sea exercises around Taiwan last week in a furious response to a visit by US House Speaker Nancy Pelosi, the highest-ranking American official to visit the self-ruled island in decades. "China has used the drills in its military playbook to prepare for the invasion of Taiwan," foreign minister Joseph Wu told a press conference in Taipei on Tuesday, accusing Beijing of using Pelosi's visit as a pretext for military action. "China's real intention is to alter the status quo in the Taiwan Strait and entire region," he said. The Chinese military said its Taiwan drills continued Tuesday and involved air and sea units.
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BROKER RATING CHANGES
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Citigroup raises London Stock Exchange price target to 9,700 (9,300) pence - 'buy'
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UBS cuts IAG price target to 170 (180) pence - 'buy'
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UBS raises Ryanair price target to 21.00 (19.20) EUR - 'buy'
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COMPANIES - FTSE 100
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Life insurance and asset management firm Legal & General reported a rise in operating profit in the first half of 2022, in line with internal expectations, as its Retirement and Retail businesses led the charge. "All four of our divisions are well positioned to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term, notwithstanding market volatility," L&G explained. In the first six months of 2022, L&G's attributable pretax profit rose 4% to GBP1.37 billion from GBP1.32 billion a year before. Operating profit improved 8% to GBP1.16 billion from GBP1.08 billion, led by strong performances from its Retirement Institutional and Retail businesses. L&G upped its interim dividend by 5% to 5.44 pence from 5.18p. It also noted its Solvency II coverage ratio improved to 212% from 182%. Chief Executive Nigel Wilson said L&G has made a "good" start to 2022.
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Holiday Inn- and Crowne Plaza-owner InterContinental Hotels Group reported a strong rise in profit in the first half as it continues to see travel demand increase. In the six months to June 30, Pretax profit multiplied to USD299 million from USD67 million a year prior. Operating profit more than doubled to USD361 million from USD138 million. Total revenue was up 52% to USD1.79 billion from USD1.18 billion. Comparable revenue per available room improved 61% in the first quarter, then grew 44% in the second quarter, the firm noted, meaning it saw 51% growth in the first half as a whole. When compared to the pre-pandemic levels of 2019, however, comparable RevPAR was still down 11% in recent half-year. The hotel operator reinstated its interim dividend, offering 43.9 US cents to shareholders for the first half. "Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform," Chief Executive Keith Barr said.
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COMPANIES - FTSE 250
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Flexible office space provider IWG nearly halved its pretax loss to GBP81.3 million from GBP173.0 million a year before, as system-wide revenue rose 22% to GBP1.45 billion from GBP1.17 billion. IWG said its is "cautiously optimistic" for the full year. "With hybrid working becoming the preferred operational model for a rapidly growing number of companies, we remain confident about the continuing structural growth drivers at play in our industry," said Chief Executive Mark Dixon. "Our strategy is focused on meeting this demand by increasing the growth and coverage of our network and we have excellent momentum in delivering capital light growth." IWG said dividends remain on hold due to macroeconomic uncertainties, but it plans to return to a progressive dividend policy as soon as possible.
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COMPANIES - SMALL CAP
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Professional services firm RPS Group agreed to a cash takeover by larger Canadian peer WSP Global, as its interim revenue rose by double digits. Toronto-listed WSP has offered 206p in cash per RPS share. RPS closed at 117p in London on Monday, giving the takeover offer a 76% premium. The stock was up 74% to 203.00p early Tuesday. RPS said its board unanimously backs the deal and shareholders representing 18% of its shares have offered their support. Chair Ken Lever said the deal was a "compelling" offer. "It represents a highly attractive premium to recent trading levels and provides certain value in cash today for RPS shareholders. The RPS directors also believe that the acquisition will provide career opportunities for our employees within the enlarged WSP group as well as access to a comprehensive and expanded service offering for our clients," he added. In the six months to June 30, RPS said pretax profit rose to GBP11.1 million from GBP7.1 million, as revenue was up 18% to GBP319.5 million from GBP271.8 million. Its raised its interim dividend to 0.45p from 0.26p.
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COMPANIES - GLOBAL
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National Australia Bank shares suffered after the lender lifted cost guidance, as it warned of expected provisions of up to AUD100 million, around USD69.7 million. NAB shares closed down 2.9% in Sydney. NAB said net profit for the quarter ended June amounted to AUD1.85 billion, up 12% from AUD1.65 billion a year earlier. "Our performance this quarter is pleasing, highlighting the ongoing execution of our strategy including completing the acquisition of Citigroup's Australian consumer business," Chief Executive Ross McEwan commented. NAB completed the AUD1.2 billion acquisition of Citigroup's Australian consumer business in June. NAB said it now expects costs to grow between 3% and 4% for the financial year, up from the previous 2% to 3% guidance. NAB expects payroll and customer-related remediation provisions of AUD60 million to AUD100 million. The provision includes a hit related to an agreement with the Australian Transaction Reports & Analysis Centre in relation to shortcomings in following anti-money laundering and counter-terrorism financing laws.
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Tens of thousands of users reported being unable to access various Google services on Monday night, according to outage monitor Downdetector. "User reports indicate Google Maps is having problems since 9:36 PM EDT," Downdetector tweeted. More than 40,000 users, including in New York City and Denver, Colorado, reported disruptions when trying to use Google's services, particularly the maps and search engine. After around two hours, reports of the outage began tapering, but a small number of users continued to report trouble accessing Google's cloud and calendar functions, according to Downdetector. "We're aware of a software update issue that occurred late this afternoon Pacific Time and briefly affected availability of Google Search and Maps, and we apologize for the inconvenience," a Google spokesperson said. "We worked to quickly address the issue and our services are now back online." Google is part of Alphabet.
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Tuesday's shareholder meetings
APQ Global Ltd - AGM
Goodbody Health Inc - AGM and GM re delisting from Canadian Securities Exchange
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By Tom Waite; thomaslwaite@alliancenews.com
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