Last updated: November 26, 2012 7:36 pm

Aberdeen outguns forecasts and rivals

Aberdeen Asset Management underlined its reputation as the stellar performer in its sector on Monday with market-beating profits and revenues against a healthy cash-rich balance sheet that will reward investors with higher dividends.

Martin Gilbert, chief executive, said: “This is a market where the winner takes it all . . . and we have been the winner. We have done extremely well this year and over the past few years, and our shareholders will see higher dividends.”

However, Mr Gilbert was the first to caution against hopes of a share buyback next year despite pressure from investors who would like to see the build up of cash returned to them.

He was also cautious over whether Aberdeen, which broke into the FTSE 100 for the first time in its 29-year history this year, can keep up the powerful run that has sent its share price rise more than fourfold since the end of 2008, comfortably outpacing its main rivals.

The shares fell 2 per cent to 336.3p on Monday as the wider market dropped too.

Aberdeen, which recorded a 15 per cent rise in underlying pre-tax profits to £347.8m; a 11 per cent increase in revenues to £869.2m; a 10 per cent increase in assets under management to £187.2bn; and a doubling of net cash to £266.4m for the year to the end of September 30, has built on its reputation as the “go to” asset manager for emerging market equities.

A recovery in equity markets has also helped results with underlying earnings per share jumping 21 per cent to 22.6p and the full-year dividend increasing 28 per cent to 11.5p.

Unlike other asset managers, Aberdeen has experienced impressive inflows into equities, particularly emerging market stocks. Equity inflows were £10.2bn, but this was offset by outflows in fixed income, property and money markets. Indeed, new client funds of £36bn – down from £43bn last year – were offset by £36bn of outflows.

Mr Gilbert recognised the need to beef up fixed income and property businesses. “We will try and keep the performance in equities and not lose discipline, while looking to improve in other asset classes,” he said.

FT Comment

The share price tells the story. Aberdeen is the star in the UK asset management sector, outshining other strong groups such as Schroders and Ashmore. Trading on a forward earnings multiple of 13.69, it is also not overly expensive. JPMorgan has raised its 12-month price target to 414p from 330p. However, there are worries over whether Aberdeen can sustain this impressive momentum as its emerging market equity business may struggle to grow further. It needs to attract business in other areas such as fixed income, property and money markets, if it wants to keep leading the pack.

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