Schroders PLC reported a stronger-than-expected first-half performance, with adjusted operating profit of £459.8 million, comfortably ahead of the S&P Global Visible Alpha consensus of £388.2 million. The firm said adjusted net operating income rose 17% year-on-year to £1.42 billion, topping analysts' expectations of £1.33 billion.
The company attributed the improvement to a combination of factors: higher assets under management, favourable movements in markets and foreign exchange, and ongoing savings from its cost transformation programme. Schroders said these elements combined to deliver stronger operating leverage that lifted revenue in the period.
Assets under management increased 12% from a year earlier to a record £867.8 billion, a level the group said was supported by favourable markets, foreign exchange and investment performance. Despite that increase, the business continued to see net client outflows of £4.2 billion in the half, a figure that includes a single £6.6 billion low-margin institutional redemption. On a basis that excludes joint ventures and associates, net outflows totaled £8.3 billion.
Management highlighted that underlying flow momentum showed signs of improvement through the second quarter. Fundraising activity accelerated at Schroders Capital and the wealth management unit posted stronger net new business during the quarter, the company said.
In market trading, Schroders shares were broadly flat in London on the announcement, lagging modest gains in the wider FTSE 100, which rose 0.4% on the day.
The group reiterated that its proposed combination with Nuveen remains on track to complete in the fourth quarter, while emphasising that the transaction remains subject to regulatory approvals.
Taken together, the results present a mix of robust profitability and operating leverage alongside persistent client redemption activity. The company has been able to leverage market and currency movements and a record asset base to drive revenue growth, even as it manages the implications of sizable outflows and works through its strategic transaction timetable.