Jupiter raises dividend by 51 per cent as profits climb and inflows recover

Lucy White
Scientist Begin Retrieving Data From Galileo After Close Call With Jupiter
Jupiter's assets under management grew to £46.9bn, an increase of £6.4bn from the end of 2016 (Source: Getty)

Shareholders in Jupiter Fund Management will be celebrating this morning, as the asset manager posted a 51 per cent rise in dividends to 6.8p per share.

Underlying earnings per share increased by 16 per cent to 16.7p, while the firm announced in its interim results that profits before tax were up eight per cent to £93.9m.

Jupiter also announced that 81 per cent of its assets under management were performing above the sector median after all fees.

Read more: Jupiter's share price falls despite dividend boost as earnings come in below expectations

“Jupiter has made significant progress in the first half of 2017, with healthy net inflows and continued strong investment outperformance after all fees, underlining the ongoing success of our diversification strategy,” said chief executive Maarten Slendebroek.

“Our culture of accountability, high performance and independent thinking gives us confidence in our ability to continue creating value for clients.”

Slendebroek was keen to point out that the rise in dividends was more of a "rebalancing" than a hike.

"We see demand from our more income orientated clients to spread the ordinary dividend in a more balanced way between interim and full-year. This should not send out the message that we look to increase the overall dividend by a high percentage," he said.

Meanwhile assets under management grew to £46.9bn, an increase of £6.4bn from the end of 2016.

Jupiter also revealed that its net management fees had shot up by 19 per cent to £186.5m.

But according to Jupiter's chief financial officer Charlotte Jones, the fee margin actually dropped by 1.3 basis points from the second half of last year to 86 basis points. "The absolute pricing that we're able to charge is gradually declining," she said.

Jupiter appears to have recovered from a wobbly start to the year, which saw its share price fall as the firm reported fourth-quarter outflows.

The firm also came under fire for proposing a whopping 50 per cent pay rise for Slendebroek, a plan which was quickly pulled after shareholders made their voices heard.

But net inflows for the six months ended in June have excelled the whole of last year's £859m to hit £3.6bn.

“Mutual fund inflows of £3.4bn were driven by sales into our fixed income, absolute return and global emerging markets strategies,” said Slendebroek.

Read more: Jupiter Asset Management chief executive Maarten Slendebroek plays down M&A rumours

After dropping on the open, Jupiter's share price was up 1.3 per cent at the time of writing. Analysts reiterated a "hold" rating, while Cantor Fitzgerald increased its target price from 470p to 550p.

However, Paul McGinnis at Shore Capital said:

Jupiter retains a very high exposure to the UK retail market where its circa-50 per cent operating margins would appear to be a red rag to a bull called the Financial Conduct Authority (FCA), which is using this metric as its main stick with which to beat the asset management industry for being non-competitive.

If the shares react positive this morning (we expect they will), our initial inclination would to suggest investors bank recent gains.

In response, Slendebroek remained confident that the firm would be safe from any FCA wrath. "We've already taken the moves that the regulator has been arguing for," he said.

Read more: Financial watchdog's push for reform of the £7 trillion asset management industry could sideline active funds

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