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Investing.com -- Shares of Schroders PLC (LSE:LON:SDR) climbed 5% today, following the announcement of an operating profit that surpassed consensus estimates and a significant cost savings plan.
The asset management firm reported an operating profit of £626 million, a 2% improvement over consensus expectations, with revenues slightly ahead and costs in line with forecasts. The company’s assets under management (AuM) stood at £779 billion, closely aligning with the consensus figure of £778 billion.
In a move that underscores its commitment to efficiency, Schroders outlined a strategy to save £150 million in costs over the next three years, aiming to achieve a cost-income ratio of under 70%, compared to the consensus estimate of 72.3%. This guidance implies an approximate 9% upside to consensus, signaling a robust outlook for the firm’s operational performance.
However, the company’s forecast for mutual funds, solutions, and institutional revenues to remain broadly flat through 2027 compared to 2024 introduces some uncertainty regarding the extent of potential upgrades. This projection suggests that while the company is on track to improve its cost structure, revenue growth may face challenges in the coming years.
Morgan Stanley (NYSE:MS) weighed in on the announcement, noting the positive initial reaction to Schroders’ cost management efforts.
"Debate likely to focus on top line deliverability given ongoing challenges to active, but initial reaction we expect positive given costs, despite share run up."
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