By Iain Withers
LONDON (Reuters) -Profit fell at asset manager abrdn in 2023 and the British firm warned of further pressure on its margins as large clients shift cash away from actively managed funds.
Shares sank more than 5% at 1548 GMT, reversing course after surging 6% in earlier trading as investors welcomed a result that slightly exceeded analyst forecasts.
Abrdn laid out plans to cut 500 roles in January, after worse-than-expected net outflows of client cash in the second half of 2023. Net outflows for the year were 13.9 billion pounds, compared to 10.3 billion pounds of outflows in 2022.
One of Britain's best known fund management firms, abrdn has endured years of clients pulling cash and has fallen out of Britain's blue chip FTSE 100 stock index.
Chief Executive Stephen Bird is attempting to drive a turnaround by shedding jobs, reducing its range of funds and expanding into mass-market investing, following the takeover of online platform interactive investor in 2022.
Bird reiterated on a call with reporters that he did not favour a break-up of the company.
Analysts at Panmure Gordon said in a note that the business case for abrdn's structure was unclear, but that it still had upside potential, given its languishing share price.
"Perhaps the most important change we have seen is in a considerably less hubristic assessment of performance and prospects," analysts at Panmure Gordon said in a note.
Abrdn reported adjusted operating profit of 249 million pounds ($316 million), down 5% from 263 million pounds the previous year and slightly ahead of analyst forecasts.
The Edinburgh-based fund firm also announced a full-year dividend of 14.6 pence per share, unchanged from 2022.
Abrdn warned it expected more large clients to move money into passive funds in 2024, which it said could further reduce its revenue margin.
The company's assets under management dipped to 494.9 billion at the end of the year, from 495.7 billion six months earlier, the firm confirmed.
Bird received a total pay package of 2.1 million pounds for the year and was awarded a bonus of nearly 800,000 pounds.
The latest cuts of mainly back office roles were aimed at restoring the company's investments business to an "acceptable level" of profitability, the firm has said.
Abrdn's shares have lost more than 60% of their value since the company was formed from the 2017 merger of Standard Life (LON:ABDN) and Aberdeen Asset Management.
($1 = 0.7887 pounds)