Adjusted pre-tax operating profits at M&G plc rose 5% in 2024 to £837m as the effects of a cost-cutting programme and growth in its asset management business took hold.
Reporting its results for the calendar year 2024, the London-based savings and investment group said that “expected” net outflows of £1.9bn “continued from UK defined benefit clients in asset management which have been largely offset by net flows internationally”. By contrast, in 2023 the group enjoyed net inflows of £1.7bn.
Joseph Pinto, CEO of M&G’s asset management division, told Funds Europe on 20 March that net outflows from the asset management division of £900m were largely driven from the division’s South African business, due to economic and political instability in the lead up to the country’s general elections. He added that “de-risking” by defined benefit pension schemes in the UK had also contributed to the outflows.
“We’ve been working on solutions for clients to go back to positive net flows within the UK DB pensions,” he said. “Enlarging the product offering to make it more global to be relevant to international clients basically has been the strategy that is starting to pay off. We are going outside the UK, but we also have a plan to make sure we go back to positive territory in the UK.”
The FTSE 100 group’s cost-cutting programme (increased this week to a target of £230m from a previous £220m) had been delivered without impacting client servicing, Pinto added.
While there had been reductions in headcount in some parts of the asset management division with some positions being relocated to India, new posts had also been created in distribution and marketing.
As part of a strategy of reducing its property footprint globally, the group has reduced the number of floors it uses at its London headquarters by two floors, though increased hybrid working since the Covid pandemic had contributed to this.
Andrea Rossi, Group Chief Executive Officer, said: “Since starting at M&G, my priority has been to strengthen the foundations of the business. Despite a tough market environment we have done this.
“In 2024 we have reduced debt, simplified our operating model, grown Asset Management adjusted operating profit by nearly 20%, and continued to drive positive momentum in Life, completing £0.9 billion of bulk purchase annuity deals and launching a new innovative solution.
“We are now moving into a new phase for the group, where we will deliver sustainable and diversified growth across Asset Management and Life.”
The group announced two new targets for 2025-2027: to grow adjusted operating profit before tax on average by 5% or more per annum, and to generate £2.7 billion of operating capital.
Philip Kett, an equity analyst with Jefferies said: that both of M&G’s businesses had positively surprised relative to consensus,” although this has not translated into a corresponding surprise on the declared dividend. Moreover, our enthusiasm is further dampened by the net flows, which are a notable disappointment in our view.
“The operating capital target is slightly below existing expectations. On the operating profit target, the market already expects an annual growth rate in line with guide, but as the starting point is higher than forecasted, there could be some upside risk to consensus.”
Joseph Pinto will be the keynote speaker at Funds Europe’s Fundtech conference in London in April.
This article was first published on 19 March 2025 and has been republished on 20 March to include new comments from Joseph Pinto.
