Aberdeen Asset Management reveals 45% profit slump

INVESTMENT manager Aberdeen Asset Management revealed a 45% plunge in half-year profits today after investors rushed to withdraw cash from underperforming funds.

Pre-tax profits slumped to £17.9 million and revenues fell 5% to £192.2 million in the six months to March 31 as market volatility and the weak pound also took their toll.

Assets under management were down by 10% to £96.3 billion compared with a year earlier, with investors pulling almost £14 billion, largely from its badly hit fixed income fund.

Chief executive Martin Gilbert warned conditions would remain tough "for some time to come", but promised a "relentless" focus on costs.

Scottish-headquartered Aberdeen has found another £20 million in annual cost savings on top of a net £60 million already identified.

Job cuts will account for some of the new cost savings, although Aberdeen said staff reductions would be one of a number of areas being looked at.

The group is also on the hunt for more acquisitions as it completes the takeover of Credit Suisse's traditional asset management arm – a move that will create the UK's largest listed fund management group.

Shares rose 3% in a buoyant wider market as analysts welcomed the extra cost cutting and reassurance over the Credit Suisse deal.

Numis Securities analysts said expectations for Aberdeen's full year figures and earnings in 2010 would be lowered, although they said some of this would be offset by the additional £20 million in savings.

"The positives from the announcement include outflows of lower margin assets relative to inflows, an additional £20 million of cost savings with the full saving expected in 2010 and confirmation that deal progress remains on track," added a Numis note.

Aberdeen unveiled a deal in December to buy parts of Credit Suisse's fund management business in a move worth £250 million.

The takeover is expected to complete by the end of June, with the first stage already having gone through late last month.

Credit Suisse will take a 25% stake in Aberdeen under the terms of the transaction, but will add another £40 billion in funds under management.