June 25, 2008 / 12:44 PM / in 9 years

Profit, sales drop at fund manager AGF Management

TORONTO (Reuters) - Second-quarter profit at AGF Management Ltd AGFb.TO fell 17.9 percent on lower revenue amid global stock market volatility and without last year’s one-time gain, the asset management company said on Wednesday.

AGF, Canada’s third largest publicly traded fund manager, said net income was C$44 million ($43.5 million), or 49 Canadian cents a share, in the three months to May 31, down from C$53.6 million, or 54 Canadian cents a share. The year-earlier results included an C$8 million securitization gain.

But the latest results beat analysts’ expectations of a profit of 45 Canadian cents a share before items, according to a Reuters Estimates survey, and AGF shares rose 46 Canadian cents, or 2.1 percent, to C$22.75 on the Toronto Stock Exchange.

Shares of AGF have fallen 23 percent year-to-date, as equity markets have been volatile and financial stocks have been punished.

AGF said total assets under management dropped 7.2 percent to C$51.8 billion at the end of the quarter, from C$55.8 billion a year earlier.

The company reported net redemptions of long-term mutual funds in May, but said on June 3 that it expects “renewed investor confidence” in the later part of fiscal 2008. AGF also manages money for institutional and high-net-worth investors.

Total revenue fell 5.2 percent to C$194.3 million in the quarter, while expenses dropped 1.1 percent to C$105.7 million.

AGF also said it secured an additional bank credit facility to allow it to repurchase up to C$60 million of class B non-voting shares.

Chief Executive Blake Goldring said in a conference call with investors that the company remains well positioned to weather a downturn and expects AGF will continue to grow when markets stabilize.

The company also said it had used some of its free cash flow to help pay down its bank loan and significantly improved its balance sheet.

In response to a question on acquisitions, Goldring told investors that the company would not shy away from takeovers and had looked at a couple earlier this year.

“Definitely at the retail space there’s no opportunities that are right there, and I think that from the institutional side, that’s something we’re always looking at from an investment perspective,” said Goldring.

The company also said that Smith & Williamson Holdings Ltd, in which AGF has an equity interest, has decided to defer an initial public offering that had been planned for some time in 2008 until market conditions stabilize.

($1=$1.01 Canadian)

Reporting by Susan Taylor and Leah Schnurr; editing by Rob Wilson

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