Schroders is warning the volatile market conditions will continue until the end of the year as industry-wide retail flows fall sharply.
The FTSE 100 asset manager this morning revealed 2007 was a record year for its retail business, with £8.8bn net sales.
However, the firm says the recent setback in equity markets will persist throughout 2008 and expects “a less favourable environment” for the business this year.
“The impact of the sub-prime crisis in America has spread to world financial markets and the real economy," Schroders says. "This in turn has affected investors’ risk appetite and retail flows across the industry have fallen back sharply.
“Our cost base has a significant variable component linked to revenues which offsets in part the impact of declining markets.
“However, we do not intend to scale back our strategic investment plans as we see this more challenging period as an opportunity to position Schroders for further growth in the longer term, taking advantage of our strong financial position and highly diversified business.”
Schroders attributes its 2007 performance to “exceptionally strong” sales across the Asia Pacific and in the UK, which saw its sales double from 2006. It adds the positive performance heavily outweighed the net outflows in Continental Europe.
In its preliminary results to 31 December 2007, Schroders recorded a 35% jump in pre-tax profit to £392.5m, up from £290m the previous year. The asset management arm profit climbed to £266.5m, from £219m in 2006.
The Schroders board also recommends an increased 21p per share final dividend, which will take its total dividend for the year to 30p per share – a 20% jump on 2006.
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