Schroders First-Half Profit Surges Past Estimates on Record Assets

Schroders PLC (LON:SDR) announced first-half operating profit that significantly beat market forecasts, driven by record assets under management (AUM) and disciplined cost controls which helped offset continued net withdrawals by clients.

Financial Performance

The asset manager reported an adjusted operating profit of £459.8 million for the period, comfortably exceeding the S&P Global Visible Alpha consensus estimate of £388.2 million. Adjusted net operating income rose 17% to £1.42 billion, also ahead of the £1.33 billion expected by analysts.

Schroders attributed the strong results to improved operating leverage, as favorable market conditions, foreign exchange movements, and investment performance boosted revenue. The company also noted that its ongoing cost transformation program contributed to savings, bolstering the bottom line.

AUM and Client Flows

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Assets under management climbed 12% from the prior year to a record £867.8 billion. This growth was primarily supported by positive market performance and currency effects rather than new client investments.

Despite the record AUM, the group recorded net outflows of £4.2 billion. This figure was influenced by a single £6.6 billion low-margin institutional redemption. Excluding joint ventures and associates, net outflows totaled £8.3 billion. However, management noted that underlying momentum improved in the second quarter, with accelerated fundraising at its private-assets division, Schroders Capital, and stronger net new business in its wealth management unit.

Outlook and Market Reaction

Looking ahead, Schroders reiterated that its proposed combination with Nuveen is on schedule to be completed in the fourth quarter, pending regulatory approvals. Following the earnings announcement, the company's shares traded broadly flat in London, lagging the modest gains seen in the wider FTSE 100 index.