Fund manager abrdn saw little change in its stock price on Wednesday morning (24th), despite announcing a large cost-saving project that will include 500 job losses.
The firm plans to save at least £150 million by the end of 2025 in order to gain an “acceptable level of profitability” for its investments business.
abrdn saw £12.4 billion in headline outflows according to a trading statement, although this “slightly overstates” the underlying picture, according to Steve Clayton, head of equity funds at Hargreaves Lansdown.
The job losses will be in mainly in management and support areas and not from core investment teams.
“No-one seems to have been expecting much different from abrdn and the stock is little changed this morning,” said Clayton on Wednesday.
Analyst Jeffries noted that outflows depressed abrdn’s investments revenue margin, which was down from 24.6 bps in the first half of 2023 to 22.4bps in the second half, due to outflows in higher margin asset classes, meaning equities and fixed income. The asset manager’s adviser segment has seen its first year of outflows.
Stephen Bird, chief executive of abrdn, said: “The new transformation programme announced today, when completed, will deliver a step change in our cost to income ratio. We exceeded our £75 million cost reduction target for 2023 for Investments, but we recognise more needs to be done.
“After a root and branch review, we are now re-engineering and simplifying our business model to remove at least £150 million of costs – mostly from group functions and support services. The programme will largely be implemented in 2024, completing in 2025. These changes will allow us to continue our focus on building a growth business.”
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