Rising costs drag down profits at Australian Ethical
Australian Ethical has reported its net profit after tax (NPAT) fell 15% to $9.6 million for the year ended 30 June, while its underlying profit after tax (UPAT) declined 7% compared with the year prior, to $10.3 million.
In its annual results announced to the ASX, the super fund said expenses rose 28% over the year as the business continued to implement its high-growth strategy, which was outlined in the FY21 results.
While funds under management (FUM) did rise 2% to $6.2 billion over the reporting period, having started 2022 with FUM of $6.94 billion, outflows were significant in the second half of the year. Despite this, the fund’s operating revenue increased 21% to $70.8 million and a final dividend of 3 cents was announced, taking the total FY22 dividend to 6 cents per share.
“Our operating revenue has increased and profit has remained solid as we invested in line with our high-growth strategy,” said John McMurdo, CEO of Australian Ethical.
“At a time when many in the financial services industry are seeing outflows, we’ve seen strong growth in both retail and wholesale net flows as well as customer numbers, as people seek to invest in line with their values,” he added.
Despite falling 8% on last year, the fund reported positive inflows of $0.9 billion, while higher margin retail and wholesale net flows (excluding institutional) rose 20% to $1.1 billion.
“In line with our strategic roadmap, we will continue with disciplined investment in our business, balanced with careful cost management,” McMurdo said. “We are prudent stewards of capital, but we’re not afraid to invest for the long term when we see a chance to further strengthen our advantages.”
“Looking ahead, we expect the growth in net flows to continue in FY23, with further diligent investment in the business as we execute on our strategic roadmap, balancing market volatility with the growth opportunity,” he added. “As such, our profit outlook will reflect the higher growth on operating expenses versus revenue.”