Amvescap to cut more jobs after earnings tumble 30%

Rachel Stevenson
Saturday 03 August 2002 00:00 BST
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Amvescap, the fund manager, will have to cut more jobs after seeing first-half profits fall 30 per cent as investors, scared off by falling stock markets, sought to cash in their funds.

Profits for the second quarter slid 69 per cent. The company, which has about 80 per cent of its business in the US and sells in the UK under the name Invesco Perpetual, has had to spend £20m on restructuring and redundancy costs.

Amvescap cut about 15 per cent of its US workforce in June and up to another 100 jobs across the company may go in the next few weeks to stem revenue losses.

Charles Brady, the executive chairman, said: "Global capital markets continue to reflect severe volatility which has impacted revenues from management fees."

But he is still confident there are many indicators the global economy will improve. "While a quick recovery does not seem likely, the fundamentals of our business remain sound. We remain committed to strong expense controls during this period of uncertainty in the general business environment," Mr Brady said.

Sarah Ing, an analyst at UBS Warburg, said Amvescap's losses were not as big as were expected, but was surprised by the £20m restructuring costs that had not been anticipated.

"They haven't had huge outflows considering the state of the US mutual fund market and operating margins have showed some improvements," she said. "The overall issue remains that, since June, markets have taken a significant turn for the worse, which is going to impact their revenue. They are managing their cost base extremely well under the circumstances."

Revenues for the three months to 30 June were down 13 per cent £368.9m. Funds under management fell 9 per cent to £239.5bn, with £2.3bn lost in outflows. An interim dividend of 5p per share was declared, up 11 per cent on last year.

Meanwhile, Jupiter, the fund manager owned by Commerzbank, returned to profit in its first full year of new management after the acrimonious departure of its chief executive John Duffield in May 2000.

Profits for 2001 were £20.9m, compared with a loss in 2000 of £46.7m mainly arising from settling a suit for wrongful dismissal with Mr Duffield. Employment costs have almost halved to £35m in 2001 compared with £62m a year ago.

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