Schroders PLC (LON:SDR) saw its profits fall in 2018 as its assets under management and fee income dropped impacted by weaker markets in the final quarter amid worries over Brexit and the US-China trade battle.
For the year ended December 31, the FTSE 100-listed fund manager reported a 5% fall in pre-tax profit before exceptional items to £761.2mln, down from £800.3mln a year earlier.
READ: Schroders posts increase in third quarter assets, led by institutional demand
The firm, which is still majority-owned by the Schroder family, posted a 6% drop in assets under management to £421.4bn, hit by net outflows of £9.5bn.
The company said it had also taken a £56mln cost hit linked to restructuring as it looks to focus on growth areas, including China.
Looking ahead, Schroders said it expected to take in at least £85bn in new assets in the near future, the bulk of which would come from a previously announced strategic wealth management partnership with Lloyds Banking Group PLC (LON:LLOY).
Peter Harrison, Schroder’s group chief executive, commented: "We have been pleased with the underlying strength of the business and the resilience of our diversified business model in 2018.”
In spite of the profit fall, the firm raised its total dividend for 2018 to 114p, up from a 113p pay-out the year before, although its final dividend was held at 79p.
Shares lower
In early afternoon trading, Schroders voting shares were down 6% at 2,593p.
Steve Clayton, manager of the HL Select UK Growth Shares fund, which has a position in Schroders said: ‘These results look bang in line with market expectations, but then, if anyone should know about managing market expectations, it ought to be a major asset manager like Schroders.”
He added: “With fees typically linked directly to the value of assets managed, it’s pretty hard for a fund management business to do anything other than position themselves for the long run and manage the impact of market movements as best they can along the way.”
New directors
In a separate announcement, the company also unveiled the appointment of two new non-executive directors, Deborah Waterhouse, chief executive of ViiV Healthcare, and Leonie Schroder, effective from 11 March 2019.
The latter was the preferred candidate of the controlling Schroder family trusts to replace Bruno Schroder, who died on 20 February 2019 and had been anticipated to retire from the board at the Annual General Meeting on 2 May 2019.