Aberdeen earnings rise as shares surge

SOARING equity markets have helped drive more investors to Aberdeen Asset Management which will this week report a sharp rise in profits.

Half-year figures are expected to be up by more than double to 81 million as the withdrawal of funds seen during the recession eased.

Pre-tax profits for the six months to 31 March are forecast to have grown 145 per cent from 33m during the same period last year.

Although Aberdeen, which is the UK's largest independently quoted fund manager, saw funds attached to equity-related investments grow during the recession, it joined many other fund management firms in suffering heavy outflows from fixed interest products.

Nicolas Burgess, analyst at Royal Bank of Scotland, expects that, in the second half of this year, Aberdeen will see the inflow of funds outpace withdrawals after a difficult period in 2009 when 16.7m was taken out from fixed-interest funds.

Burgess said: "If the company maintains the current investment performance in fixed interest portfolio, we are confident that the outflows will slow significantly over the next 12 months as the poor performance figures begin to roll off the three-year numbers."

Analysts at Singer Capital Markets expect Martin Gilbert, chief executive of Aberdeen, to confirm further improvements in the firm's debt position. It is expected to have repaid all 70m of its short-term debt by the end of this year, before moving to a net cash position by the end of next year.

Singer Capital noted: "Having been criticised heavily for poor cash generation, management have put debt elimination high up the agenda and cash flow is being used to reduce debt as a priority."

Aberdeen's half-year figures, released on Tuesday, are expected to reflect the benefits of a string of acquisitions made over the past 18 months, including the purchase in January of RBS's "fund of hedge funds" business for 84.7m. In December 2008, Aberdeen bought the bulk of Swiss bank Credit Suisse's global fund management business although it later offloaded some of those funds to Surrey-based Premier.

This year Aberdeen reported that assets under management had grown to 161 billion at the end of February, an improvement on the 102bn reported in the first half of 2009.