Ashmore misses forecasts, remains bullish on future

11th Sep 2014 08:57

Market volatility and the strength of sterling dragged annual profits for emerging markets asset manager Ashmore marginally below market expectations, but assets under management (AuM) remained resilient.AuM was down 3% year-on-year to $75bn at 30 June, as flagged, mostly from redemptions from its lower margin overlay/liquidity investment theme, while the other themes were solid.Diluted earnings per share was 36% lower at 18.4p, 3% below estimates, while the dividend was increased by 2% to 16.45p in line with forecasts.Chief executive Mark Coombs said: "Ashmore's financial results for the year reflect the impact of market volatility experienced for much of the period and the effects of sterling strength."The operational performance was sound, operating cost control and flexibility was demonstrated, and the group continued to make strategic progress in the period."This saw total operating costs reduced by 23% to £97.9m, helping to mitigate the pressure on profits from sterling.Profit before tax fell 34% to £170.3m, of which £46m was attributable to foreign exchange (FX) translation effects and £30.1m to lower performance fees "as a consequence of the market sell-off in May and June 2013 and continued volatility throughout the first half of the financial year", the company said. The remainder was largely explained by a reduction in net management fees, offset by the lower operating costs.Coombs was bullish about prospects for the company's investment markets and said: "Emerging nations are generally in good health; aggregate GDP growth in emerging markets was 4.5% in 2013 and is expected to be higher still in 2014, inflation is at acceptable levels, and FX reserves remain strong."Analysts at Numis said despite the consensus forecast miss, they did not anticipate changing our forecasts materially, given the broadly offsetting impacts of fund performance, weaker sterling and lower opening fee margins.Peel Hunt added: "Although results were marginally below expectations, mainly as a result of sterling strength, margins remain attractive at 65%. The group is well positioned in the long-term strength of emerging markets and offers investors an attractive yield."Shares in Ashmore were down 7.1% to 320.6p at 10:00 on Thursday.