Ashmore reports full-year profit growth despite AuM challenges

(Sharecast News) - Emerging markets-focussed asset manager Ashmore Group reported a relatively positive set of final results on Thursday, despite some challenges in assets under management (AuM). The FTSE 250 company's AuM totalled $49.3bn by the end of June, supported by a $2.1bn gain from investment performance.

While redemptions were lower, the group experienced net outflows of $8.5bn.

The firm reported adjusted net revenue of £187.8m, a 4% decline year-on-year, mainly due to a 10% drop in average AuM.

Performance fees significantly boosted revenue, rising from £5.1m in 2023 to £22.7m in 2024.

However, net management fees fell by 12%, contributing to an overall adjusted EBITDA decline of 27%, with EBITDA totaling £77.9m.

Adjusted operating costs increased by 22%, driven by variable remuneration tied to performance fees, capital gains, and interest income.

Despite the cost pressures, Ashmore saw a 15% increase in profit before tax, reaching £128.1m, bolstered by a £21.7m gain from seed capital investments and £24.9m in interest income.

The company also realised a £5.2m gain from the disposal of investments.

Diluted earnings per share (EPS) rose 12% to 13.6p, although adjusted diluted EPS declined by 17% to 10.5p.

Ashmore said it maintained a strong balance sheet with £700m in capital resources, including £500m in cash and deposits.

The final dividend was held at 12.1p per share, contributing to total dividends of 16.9p per share for the year.

Its active management strategy delivered medium-term investment outperformance, with around 60% of AuM surpassing benchmarks over three and five years.

Ashmore said it was positioned to capitalise on further emerging markets growth, with equities AuM increasing by 8% and local asset management platforms expanding AuM by 7% to $7.5bn.

Looking ahead, Ashmore said it expected a resilient performance from emerging markets, driven by effective economic policies and robust fundamentals.

"Ashmore's diversified business model delivered strong profit growth this year notwithstanding the impact of lower assets under management levels," said chief executive officer Mark Coombs.

"The emerging markets continue to perform well; for capital flows to respond more powerfully to this positive backdrop requires near-term uncertainties to be resolved in some investors' minds.

"Some of these factors, such as the phasing of the next Fed rate cycle and the outcome of the US election, will become clear over the coming months."

Coombs said that as pent-up demand was unlocked, the pick up in investor interest in the emerging markets should gather momentum through the second half of 2024 and into 2025.

"Ashmore is delivering investment outperformance for clients and has a highly-scalable operating platform, which means it is well-positioned to benefit from capital flows to emerging markets as investor risk appetite increases."

At 0904 BST, shares in Ashmore Group were up 2.08% at 176.5p.

Reporting by Josh White for Sharecast.com.