Quilter (LON: QLT), the UK wealth manager, saw its shares fall even after reporting record first-half net inflows and double-digit profit growth, as markets focused on costs rising faster than revenue.
The shares closed on Thursday, results day, at 196.0p, down 3.3% from Wednesday’s close of 202.6p. They recovered to 200.0p on Friday, still below the 52-week high of 209.0p. The shares are at 200.26p this morning (Monday).
Quilter, which runs an investment platform, funds and advice business alongside its Quilter Cheviot discretionary wealth arm, reported core net flows, the new client money it retained after withdrawals, of £6bn for the first half, a record and up more than 30% year-on-year, equivalent to 9% of the assets it managed at the start of the period. Revenue rose 12% to £379m, driven by a 16% increase in net management fees, while adjusted profit climbed 12% to £112m and adjusted diluted earnings per share rose 13% to 6.1p.
Operating costs rose 13% to £267m, reflecting inflation and continued spending on technology, distribution and its brand. That kept the operating margin, the share of revenue left as profit after running costs, flat at 30% instead of expanding as promised. Management said full-year costs are likely to land toward the top of its previously guided £530m-£540m range, and declined to give a timeline for reaching its longstanding ambition of a mid-30s margin, leaving the market to price in execution risk on profitability rather than growth.
Analyst views on Quilter are split. Brokerage Keefe, Bruyette & Woods rates the stock Outperform with a 230p target, and broker RBC Capital also rates it Outperform with a 225p target, while bank Deutsche Bank rates it Hold, having lifted its target to 180p from 170p.
Quilter declared an interim dividend of 2.1p per share, up 5% on last year’s interim payout, and had completed more than £68m of a planned £100m share buyback as of 31 July.