abrdn Reports Strong 2024 Results with 8% Revenue Growth and Improved Margins
Why we think this is good
abrdn has delivered a solid performance in 2024, with notable improvements across key financial metrics. The 8% increase in fee-based revenue to £721m and the rise in operating profit from £128m to £187m demonstrate strong business momentum. The improvement in adjusted operating margin to 26% from 24% last year is particularly encouraging, indicating enhanced operational efficiency. Positive net inflows in both the Investments and Interactive investor segments suggest growing client confidence. The company's strong balance sheet, with £0.8bn of regulatory capital resources in excess of requirements, provides a robust foundation for future growth. However, while these results are undoubtedly positive, the company's valuation is somewhat high, and management has noted potential headwinds from market volatility and geopolitical uncertainty. These factors, combined with the share price being near its 52-week high, suggest that much of the good news may already be priced in, limiting potential for significant short-term share price appreciation.
Key Points
- Fee-based revenue increased by 8% to £721m
- Operating profit rose from £128m to £187m
- Adjusted operating margin improved to 26% from 24%
- Net inflows of £2.9bn in Investments segment
- Interactive investor saw net inflows of £1.8bn
- Capital generation increased to £170m from £159m in 2023
- Strong balance sheet with £0.8bn of regulatory capital resources in excess of requirements
- Adjusted diluted EPS increased from 6.8p to 7.9p
- Final dividend of 7.3p per share, bringing total 2024 dividend to 14.6p
Summary
abrdn has reported strong financial results for 2024, demonstrating resilience and growth in a challenging market environment. Key highlights include:
- Fee-based revenue up 8% to £721m
- Operating profit increased from £128m to £187m
- Adjusted operating margin improved to 26% from 24%
- Net inflows of £2.9bn in Investments segment and £1.8bn in Interactive investor
- Capital generation of £170m, up from £159m in 2023
- Strong balance sheet with £0.8bn of regulatory capital resources in excess of requirements
The company's performance reflects successful execution of its growth strategy and operational efficiency initiatives. However, management notes potential challenges from market volatility and geopolitical uncertainty. With the current share price of 162p near the 52-week high of 173.95p, the market appears to be pricing in these positive results. The broker target of 155p suggests limited short-term upside, but the company's improved fundamentals may support long-term value creation.