Aberdeen Asset Management’s net revenue is down by 14% to £1007.1 million (€1185.8 million) from £1,169 million in 2015 as the firm was hit by £32.8 billion of outflows over the year.
Its underlying profits before tax have fallen by £138.9 million down to £352.7 million this year due in part to the firm’s exposure to emerging markets but sentiment seems to be changing on this asset class.
“Emerging Markets have been out of favour for some time, and outflows from the group’s higher margin EM debt and equity funds have been hitting the business hard,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
However he added that there are suggestions that conditions were improving by the end of the summer, as weaker sterling boosted overseas asset values and flows turned positive on emerging market equity products.
Aberdeen’s assets under management increased by 10%, perhaps an indication of improving emerging market sentiment. Lower sterling value and less acquisitions also aided Aberdeen according to Hargreaves Lansdown, giving the firm a strong cash position of £548.8 million at year-end.
However, Hargreaves Lansdown’s Hyett thinks Trump’s policies may impact the markets that Aberdeen is strong in. He said with Trump looking set to pull out of the Trans-Pacific Partnership, and even calling NAFTA into question, it looks like the US could shut its doors to a significant proportion of emerging market output.
Martin Gilbert, chief executive of Aberdeen, said: “These financial results reflect, in part, our diversified business model and strict cost management. Economic and political newsflow has weighed on investor sentiment and as expected has led to further outflows from our business.”
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