Henderson's cautious outlook offsets earnings forecast beat

A more cautious outlook statement from Henderson Group sent shares in the company lower on Thursday despite annual earnings beating consensus forecasts.

Final results from the FTSE 250 funds group saw assets under management (AuM) of £92.0bn, up 13% over the year and ahead of consensus forecasts of just over £89bn thanks to record net inflows for the year of £8.5bn.

Net revenue was slightly below expectations at £602m though performance fees up 19% to £99m were ahead.

Underlying profit before tax from continuing operations was 17% higher at £220m, with diluted adjusted EPS rising by the same degree to 17.2p, versus consensus forecasts of 16.7p.

A final dividend of 7.2p per share was recommended, taking the total to 10.3p, in line with expectations.

However, chief executive Andrew Formica said: "The first few weeks of 2016 have been challenging for investors and our clients, with a wide range of economic and geo-political risks weighing on markets.

"We will review our short term plans if difficult market conditions persist, but remain focused on our long term goals to grow and globalise our business."

But he said otherwise momentum was strong, with a good pipeline of institutional investment strategies that leave management optimistic about the outlook.

Analysts at Numis said the outlook was "a little more cautious than previously".

"We continue to see Henderson more exposed than many traditional asset managers to a market downturn, given its higher than average reliance on performance fees and market expectation of continuing strong retail flows."

Numis added that it regarded Henderson as an asset manager "with a lower than average quality of profit" and expressed a preference for Jupiter or Schroders.

Presenting a more optimistic view Shore Capital observed that 2015 saw some very material quarterly moves in global equity markets and "therefore the high beta nature of the sector means share prices can rapidly recover in a rally", with Henderson offering "strong ability to actually monetise periods of good investment performance through performance fees".

Shares in Henderson were down as low as 227p, close to 12-month lows, before recovering to 232.1p by 1045 GMT, a near-6% fall on the day.