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Amvescap:1Q Results
Amvescap reported a 20% decline in pre-tax profits, below market expectations, for the first quarter of 2005. Pre-tax profits reported were £59.1m down from £73.6m last year and turnover declined marginally to £286m (2004:£288m).
A large drop in investment income (to £1.4m from £9m last year) and lower operating margins (24% against 25.7% last year) were responsible for the drop in operating profits.
Funds under management were US$375.4bn at end March 2005, compared to US$382.1bn in December 2004. US$2.5bn of the decline in funds under management is due to continued outflows of funds. The company suffered an outflow of US$7.6bn in the fourth quarter of 2004 and in the light of that performance, this is an improvement, although it is worse than the outflow of US$1.5bn in the 1st quarter of 2004.
The good news was that the company managed to generate a positive cashflow of £12.9m for the quarter, up from a negative £16m last year.
The company is searching for a new CEO and a possible take over (the company was rumoured to be in talks with France’s Societe Generale) could be bring possible short term upside. The reduction in net outflows from the fourth quarter is welcome, as is the increased cash generation but we remain bearish on the company’s prospects. Our previous report deals with the problems facing the company in more detail.
The stock trades at 314.5p on a prospective PE of 14.3x with a yield of 2.7%.
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