* Macquarie expects profit to jump by up to 10%
* Australian company is second biggest gas marketer in N.
America
* U.S. gas sales turn around profit outlook for the global
bank
(Adds comments, detail on outlook)
By Paulina Duran and Jonathan Barrett
SYDNEY, Feb 22 (Reuters) - Macquarie Group earned
big profits off the winter storms sweeping across Texas and
other U.S. states, with the gains from its trading operations
single-handedly changing the Australian bank's outlook for the
year.
The company is the second-largest gas marketer in North
America behind oil major BP, and the week of big trading
revenue has single-handedly boosted the bank's overall profit
outlook for the year by 10%.
The windfall comes after nearly a week of frigid
temperatures that knocked out power for millions of people in
the United States, particularly in Texas, forcing many to spend
several nights without heat or electricity. Some consumers are
also expected to face monumental utility bills in coming months
as a result of Texas's largely unregulated system.
Macquarie on Monday said it expects fiscal 2021 profits to
jump by as much as 10% after warning just two weeks ago that
earnings would be "slightly down."
The company's energy business unit trades large quantities
of gas to meet unexpected consumer demand, and it could boost
the bank's overall profit by about A$400 million ($317 million),
analysts said.
"Extreme winter weather conditions in North America have
significantly increased short-term client demand for Macquarie's
capabilities in maintaining critical physical supply across the
commodity complex," the company said in a statement.
The deadly winter storm that crippled infrastructure and
left millions of Texans without power meant electricity
generators had to compete for natural gas supplies, pushing up
prices sharply in the deregulated market.
"Macquarie appears to be capitalising well on volatility and
financial market dislocation," Bank of America Securities
analysts said in a note, as it increased its earnings forecasts
for the Sydney-headquartered company.
Macquarie purchases natural gas and moves it along pipelines
and grids, typically from areas where usage is low to
high-demand markets.
“They have access to a lot of gas and likely had some in
storage, plus they likely also had firm transportation
agreements which means they were able to transport their
molecules while others were displaced," said John Kilduff,
partner at Again Capital LLC in New York.
Macquarie's performance hurt last year by the pandemic, with
subdued deal-making and deteriorating economic conditions
leading to a rise in impairment charges.
But a strong initial public offering of its majority-owned
data analytics software business, Nuix, late last year and a
fillip in the energy business have helped push its share price
back to pre-pandemic levels.
The company, which also operates Australia's largest asset
manager and investment banking business, is set for extra boost
from a rebound in local M&A activity this year.
Macquarie's shares were 4.3% higher at A$148.39 on Monday,
the highest level in a year, outperforming a broader market
that was flat. The share price eased slightly in
afternoon trading.
Earlier this month, the Sydney-based financial conglomerate
had forecast full-year earnings for the group to be "slightly"
lower than in fiscal 2020.
Macquarie's Commodities and Global Markets division
contributes close to 40% of its group earnings. Analysts had
previously raised concerns that the pandemic could erode profits
from the division if high energy-use industries shuttered.
(Reporting by Paulina Duran and Jonathan Barrett; Additional
reporting by Shriya Ramakrishnan and Scott DiSavino; Editing by
Peter Cooney, Jane Wardell & Shri Navaratnam)
BP (BP.)