Ninety One shares fall despite higher full-year earnings

(Sharecast News) - Ninety One shares fell more than 7% on Wednesday despite the asset manager reporting higher full-year earnings and a return to annual net inflows, as investors appeared to focus on the quality of asset growth and only modest growth in statutory profit.

The London- and Johannesburg-listed group said assets under management rose 31% to £171.8bn in the year ended 31 March, from £130.8bn a year earlier.

However, much of the increase came from the £18.3bn AUM take-on from Sanlam and a positive market and foreign exchange impact of £19.9bn, rather than organic growth. Net inflows totalled £2.8bn for the year.

Profit before tax edged up 2% to £207.5m, while adjusted operating profit rose 12% to £211.3m. The adjusted operating margin improved to 32.0% from 31.2%, and adjusted earnings per share increased 12% to 17.4p. Basic earnings per share rose 2% to 17.5p.

The share-price fall suggested investors were unconvinced that the headline rise in AUM was enough to offset a more subdued profit performance and continuing pressure in parts of the business.

Ninety One said equities were the main driver of net inflows during the year, helped by demand for global strategies in the first half and natural resources in the second.

Fixed income also saw inflows, led by blended strategies, while multi-asset recorded outflows from some South African strategies.

By region, Asia Pacific was the largest contributor to net inflows, supported by global equities, gold, natural resources and local currency fixed income strategies.

Europe and the Americas also generated inflows, while the UK and Africa saw outflows excluding the Sanlam transfer.

The board proposed a full-year dividend of 13.4p per share, up 10% from 12.2p a year earlier. The final dividend of 7.4p per share is due to be paid on 6 August to shareholders on the register on 17 July.

Founder and chief executive Hendrik du Toit said Ninety One was "a resilient and robust business with positive momentum", adding that demand recovery for emerging markets was visible and that the group was in a stronger position than a year earlier.

"We are investing through the cycle in talent and technology to be future fit," he said.

"Over the past year we pursued and established several significant partnerships.

"We are committed to cost and operating discipline and our focus remains on investment performance and client service."

In a separate announcement, Ninety One said it would increase its share buyback programme to £55m from £30m and extend the deadline for repurchases to 21 July 2026.

The company said shares bought under the programme would be cancelled to reduce its ordinary share capital.

At 0842 BST, shares in Ninety One Group were down 7.2% at 206.2p.

Reporting by Josh White for Sharecast.com.

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