Amvescap profits slide as US retail business falters

Amvescap, the giant fund manager that owns Invesco, yesterday unveiled gloomy figures for the first nine months of the year, saying profits have slipped to just over a tenth of what they were this time last year. The Anglo-American group also announced that Robert McCullough, the chief financial officer, would retire in April. He will be replaced by James Robertson, who is currently executive vice president.

Pre-tax profits fell to £14m in the first three quarters, from £132.6m in 2002. Its shares shed 35.5p to 458.5p.

Along with its rivals, Amvescap has seen revenues and profits slide over the past two years, hit by declining equity markets. The company has also been suffering from poor investment performance, especially in its US retail business, where a number of clients have pulled out of their funds.

Analysts said a rise in third-quarter costs had raised fears that the company would miss its goal of shaving $150m (£89m) from annual expenses by the end of the year. However, the company said it had achieved $110m of the reductions by the end of September.

Amvescap has embarked on a major restructuring programme to cut costs and boost performance and it said figures for the three months to 30 September showed evidence of improvement. Profits before tax stood at £77m in the quarter, up 24 per cent on the previous quarter but below the consensus forecast of £81m. The company has cut more than 200 staff in the third quarter and said there would be further reductions. Mr McCullough said: "This quarter is a very good starting point for us, a good turnaround quarter."

Charles Brady, the chairman of Amvescap, struck an upbeat note about prospects for the fund management world, saying: "The major financial markets are reflecting improved investor confidence."

Mr McCullough said Amvescap saw $4.3bn of outflows in the third quarter despite greater confidence in stock markets. US mutual funds - equivalent to unit trusts - accounted for $1.3bn of the total outflows, US institutions accounts for $1.8bn with the balance from the UK and Asia. "They are heading in the right direction, but not as fast as people hoped," said Martin Cross, at Teather & Greenwood.