Macquarie profit misses estimates on downbeat commodities unit, shares slide

By Rishav Chatterjee

(Reuters) -Macquarie on Friday posted first-half earnings that fell short of estimates, reflecting subdued volatility in energy markets, which hurt profit at its key commodities trading arm, sending its shares to an almost two-month low.

The financial conglomerate's profit attributable for the six months ending Sept. 30 came in at A$1.61 billion ($1.06 billion), missing a consensus estimate of A$1.73 billion, according to Visible Alpha. It also declared an interim dividend of A$2.60 apiece, down from A$3.85 it paid in the previous half year.

It now expects income from the commodities business to be lower in the short term unless rising volatility creates opportunities.

"With an earnings miss, downgraded guidance and dividend cut, we expect the stock to trade down today," Citi analysts said in a note.

Shares of Macquarie were down as much as 4.5% to A$221.11, and were set for their weakest trading session since early August.

The Sydney-based firm has been reaping the benefits from its commodities and global markets business in recent years, as it held a portfolio of a unique set of energy stocks.

The business performance however was downbeat at a time of reduced volatility in oil and gas prices, with clients relying less on banks for hedging.

The firm's asset management unit drove an overall 14% jump in profit for the six months on rising sales from investments in renewables as companies and consumers shift to greener forms of energy.

Macquarie's shareholders have, in the recent past, dampened anticipation of improved earnings and returns, while the company had promised a profit lift once energy trading and deal-making activities rebound.

"Macquarie continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions it well to respond to the current environment," the company said.

Macquarie Asset Management profit jumped 68% to A$684 million for the six months.

The improved performance at the wealth management unit was not enough to offset a slowdown in advisory work at Macquarie Capital, the company's investment banking operation.

"The result reflected lower investment-related income due to reduced credit and other impairment reversals and higher funding costs for a growing equity investment portfolio," Macquarie said for its investment banking business.



It also approved the extension of its ongoing A$2 billion buyback for an additional 12-month period.

($1 = 1.5198 Australian dollars)

Source: Investing.com