Magellan Financial Group is Australia’s most famous fund manager. The MFG share price had been on a decent recovery path following a very slow beginning to the year where MFG funds were subject to a decrease in Funds Under Management. This morning, MFG announced a disappointing FY21 earnings report and hence, the MFG share price tanked over 10% at market close.
The MFG share price has been under pressure all morning as Magellan reported a 33% decline in Net Profit after Tax. NPAT declined from $396.2 million in FY20 to $265.2 million in FY21. Among the highlights in the announcement are:
- Average funds under management up 9% to $103.7 billion
- Profit before tax and performance fees of the Funds Management business up 10% to $526.6 million
- Adjusted net profit after tax and before associates up 4% to $454.4 million
- 114.1 cents per share dividend declared for six months to 30 June 2021
- Total dividends for the year of 211.2 cents per share
Brett Cairns, CEO, said: “The 2021 financial year has been a very busy and productive one for Magellan with the completion of a number of important initiatives that we believe will add meaningfully to Magellan’s value, diversity and resilience over time. Our funds management business continues to perform strongly. During the period Magellan saw a 9% growth in average funds under management to $103.7 billion. Profit before tax and performance fees of our funds management business increased 10% to $526.6 million, reflecting the increase in average funds under management and cost efficiencies.
On a positive note though, Magellan’s investments that were made in FY21 have been yielding good results. Magellan Capital Partners’ three new strategic investments – FinClear, Guzman y Gomez and Barrenjoey Capital Partners have all performed strongly over the year. Magellan also launched a number of new funds and strategic initiatives during the period. These include the MFG Core Series, Magellan Sustainable Fund and Magellan FuturePay. Magellan has shifted its focus towards the growing retail investors here in Australia and only time will tell if the bet will pay off.
As for the MFG share price, the decline in profit will likely cause more volatility for MFG shares in the short term. MFG shares closed at $46.20 a share.
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