Schroders profits fall in first half as it warns of 'headwinds'

Schroders' CEO Peter Harrison

Schroders' CEO Peter Harrison

British asset manager Schroders said pretax profits fell 14% in the first half, hit by weak markets at the start of the year and total client net outflows of £1.2bn.

The business reported pre-tax profits of £340.4m versus £397.1m in the first half of 2018, on net income of £1.03bn, down 5% from the same period of the year before.  Net outflows over the period were £1.2bn, it said in a statement this Thursday.

Schroders said that a "risk off" environment in financial markets in 2019 was particularly evident in the intermediary channel, where there were net outflows of £2.4bn, principally from equity products. 

Fee margins were also weighed on "business mix changes" as the company continued to adjust its asset  exposure to more off-market and real estate opportunities.

In a statement, chief executive Peter Harrison said: ‘We have continued to follow our strategy of selectively investing in key areas to drive the long-term growth of the business through a combination of inorganic investments and organic hiring.

"In a challenging market, we continue to broaden and enhance our range of investment capabilities to help meet our clients' needs. We remain on track with our plans, giving us confidence that our diversified business model and global presence position us well."

The institutional channel proved more resilient and clients awarded Schroders net new business of £300m and its wealth management arm continued to perform strongly with net new business of £900m.

"We continued to see headwinds across the industry throughout the first half of 2019. However, our diversified business model and global footprint mean we are well positioned for the long term," the group said in a statement.

Schroders' assets under management reached a new high of £444.4bn at the end of June and the company said its pipeline of net new inflows was strong. The first part of a large Lloyds mandate, around £45bn of assets, is due to arrive in the second half of the year. 

The interim dividend was held unchanged at 35p per share.