Schroders Plc. released its preliminary financial results for 2002 Tuesday, saying profits jumped as successful cost-cutting measures continue to fuel its recovery efforts amid "challenging" market conditions.
- The British asset management firm posted a full-year profit of 18.9 million pounds, before taxes, reversing a loss of 8.1 million pounds in the year-ago period when it took a massive restructuring charge. Analysts were expecting the company to earn 19.2 million pounds. On a pro-forma basis, the company earned 9 pence a share for 2002, compared with 7 pence a share, a year earlier.
Funds under management, 69% of which are in equities, fell to 88.3 billion pounds from 110.4 billion pounds due to the ill effects of the stock markets precipitous decline. Net outflows of funds slipped to 2.2 billion pounds from 6 billion pounds, with much of the outflow occurring in the first half of 2002.
Since the arrival of Michael Dobson, who was appointed chief executive in 2001 to turn the company around following the sale of its investment-banking business, Schroders has successfully cut jobs and exited or outsourced its non-core operations. The company pared costs by 50 million pounds in 2002 and expects to cut another 25 million pounds in 2003.
"The strength of our balance sheet is a competitive advantage in the current environment, even if, short-term, it depresses returns," the company said in a prepared statement.
"With increasing cost pressures on asset managers and with valuations well below where they were two years ago, opportunities are likely to arise to deploy our surplus capital by way of acquisitions to complement and accelerate organic growth," the company said.