Schroders raises payout on strong results

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Schroders reaffirmed its position as one of Europe’s most successful managers of money on Thursday with a strong set of results.

The FTSE 100-listed asset manager, the biggest in the UK, beat expectations on profits, recorded multibillion-pound net inflows and sharply increased its dividend to underline its position of strength in the market place.

The big increase in the dividend from 39p in 2011 to 43p for 2012 highlighted its financial health on the same day that Aviva, the insurer, slashed its dividend 44 per cent.

Investors and analysts praised the company as its shares rose 2.46 per cent to £20.86, outperforming the wider market by 2 percentage points.

“We are in a very strong financial position and have generated a lot of new business . . . This is shown by our strong inflows and the growth in our assets under management,” said Michael Dobson, chief executive.

The only blot on the landscape was the fall in profits before tax at the end of December 2012. However, investors said the 11.6 per cent fall to £360m was from a high water mark of £407.3m in 2011.

Net inflows were £9.4bn compared with £3.2bn in the previous year, with half of those inflows in equities. Assets under management grew to £212bn compared with £187.3bn in 2011.

Schroders has been consistently one of the strongest performing asset managers in Europe, helped by its brand name, size and distribution capabilities.

It has also been a big beneficiary of the great rotation out of cash and low-yielding bonds into equities, particularly in Europe, a no-go area for many investors before the European Central Bank’s pledge in July to do everything in its power to prevent the collapse of the euro in July.

FT Comment

Michael Dobson is a no-nonsense, straight-talking chief executive. He is not a man for small talk, except perhaps when discussing Chelsea, the football team he supports. It is, therefore, interesting to note that one of the key ingredients of Schroders’ success has been stability, unlike Chelsea where managers have come and gone in recent years. Mr Dobson, who has been at the company 12 years, epitomises this stability. Brand, size and distribution have helped too. Although the company trades on an expensive forward price earnings multiple of 18.11, investors say the company is still worth buying. Mr Dobson is also a man who will not rest on his laurels, which explains acquisitions in India and the US, where the company wants to establish itself further. If equities continue to push higher, then Schroders looks good value even with an expensive rating.

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