Macquarie first-half profit misses estimates on downbeat commodities unit By Reuters

By Rishav Chatterjee

(Reuters) -Financial conglomerate Macquarie on Friday posted first-half earnings which fell short of market expectations, reflecting subdued volatility in energy markets which hurt profit at its key commodities trading arm.

Macquarie’s profit attributable for the six months ending Sept. 30 came in at A$1.61 billion ($1.06 billion), missing a consensus estimate of A$1.73 billion, according to Visible Alpha. It also declared an interim dividend of A$2.60 apiece.

The firm in recent years has been reaping the benefits from its commodities and global markets business as it held a portfolio of a unique set of energy stocks.

The performance of the business however was downbeat at a time of reduced volatility in prices of oil and gas, with clients relying less on banks for hedging.

The firm’s asset management unit drove an overall 14% jump in profit for the six months on rising sales from investments in renewables at a time when companies and consumers shift to greener forms of energy.

Macquarie shareholders have, in the recent past, dampened anticipation of improved earnings and returns, while the company had promised a profit lift once energy trading and deal-making activities rebound.

“Macquarie continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions it well to respond to the current environment,” the company said.

Macquarie Asset Management profit jumped 68% to A$684 million for the six-months.

The improved performance at the wealth management unit was not enough to offset a slowdown in advisory work at Macquarie Capital, the company’s investment banking operation.

“The result reflected lower investment-related income due to reduced credit and other impairment reversals and higher funding costs for a growing equity investment portfolio,” Macquarie said for its investment banking business.

It also approved the extension of its ongoing A$2 billion buyback for an additional 12-month period.

Macquarie shares were down as much as 4.5% to A$221.11, and were set for the weakest trading session since early August.

($1 = 1.5198 Australian dollars)