Platinum cuts dividends as profits dive amid client outflows
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The news: Fund manager Platinum Asset Management slashed dividends and fell short of market expectations, reporting a 44% drop in full-year profit to $45.14m.
The decline was driven by more client exits, with their performance fees following them out the door, coupled with a costly turnaround plan that ate into profits.
Platinum didn’t earn any performance fees, as most of its funds underperformed broader market returns.
The numbers: The fund manager declared a final dividend of 4 cents per share, lower than the 7 cents paid for the same period last year but broadly expected.
Analysts polled by Visible Alpha, however, had expected Platinum’s profits to plunge by less than a third to $55.5m.
Management fees shrank 13.5% to $174 million, primarily due to a 15.5% decline in average funds under management, the company said.
About $4.9b in net client funds walked out the door during the year, including a $1.2 billion outflow from one single institutional client.
Seed investments lost $0.6 million, down from last year’s $6.3 million gains, as large losses by Platinum Asia Investments more than offset gains in its health care strategy.
Expenses grew 11% to $111.8 million, despite lower compensation, marketing and insurance costs, the company said.
That was due to implementation costs of its turnaround program, which it said was entering a new phase of “growth”. Excluding those costs, adjusted expenses fell 9% to $91.45 million.
The context: Weeks after Platinum’s new CEO Jeff Peters stepped in to succeed Andrew Clifford at the beginning of the year, the company announced a two-step 'reset and growth' turnaround strategy to slash costs, reassess its product lineup and overhaul its investment platform.
On Wednesday, Platinum chairman Guy Strapp said the first part of that plan was almost done so the company was “now moving into the ‘growth’ phase of the program.
Over the past 12 months, Platinum's shares have fallen more than 35%, impacted by fund outflows and underperformance in a challenging market.
What they said: “We recognise that it has been a challenging year for the company and consequently our shareholders,” Strapp said.
“Meaningful transformation takes time. However, we are making good progress and I am confident that we will deliver on our turnaround program.”
The source: Company announcement
