Legg Mason reports solid December quarter

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Demonstrating the sound business structure behind its multi-affiliate model, Legg Mason Inc. has reported net income of US$51.4 million on revenues of US$715.2 million in the December quarter, 2016.

The latest quarterly results compared with net loss of US$138.6 million in the December quarter of 2015 and a profit of US$66.4 million in the September quarter of 2016. The revenue figure compares with US$659.6 million in the December quarter of 2015 and US$748.4 million in the September quarter last.

Legg Mason’s business model involves nine separate active funds management firms encompassing the full range of asset classes and styles. Total assets under management were US$710.4 billion as at the end of December.

Joseph A. Sullivan, Chairman and CEO of Legg Mason said: “During the quarter, Legg Mason delivered operating results that were in line with market expectations, after excluding some non-cash charges, while continuing to drive strategic progress despite significant industry headwinds. The Company’s operating results reflect higher non-pass through performance fees for the quarter and our continued focus on managing costs. Outflows for the quarter were impacted by challenging industry trends for active managers and driven by US equity and alternative strategies, partially offset by fixed income inflows. Investment performance improved during the quarter, and Legg Mason’s global distribution platform had positive net flows for the twelfth time in the last thirteen quarters.

“We remain focused on continuing to expand choice for our clients through product innovation, translating our investment capabilities from legacy and new managers into new products and vehicles that meet evolving investor needs. Additionally, we will continue developing technology to further support our distribution partners, as they look to better serve clients.

“Going forward, we see significant opportunity for active asset managers who provide distinct investment styles and who embrace the need to evolve their business models to better serve clients.”
The Australian business, performed well over the period, according to Andy Sowerby, Managing Director of Legg Mason Australia.

He said that a combination of new products and strong investment performance contributed to strong asset growth in both wholesale and institutional segments.

“Both for the past quarter and for the year in full we had many standout performers across our fund range. This was true for Australian equity and bond strategies alongside our global equity, global bond and multi-asset offerings. Our investment affiliates, including Western Asset, Brandywine Global, QS Investors and Martin Currie all showed their resilience and the power of our multi-affiliate model in a difficult market climate.”

Mr Sowerby added that it was important for fund managers to make a reasonable return on capital for their shareholders, so they could continue to reinvest in their businesses and provide optimum performance for their clients.

“In this vain the local business continues to invest with for growth having announced plans to open a new Sydney office alongside recruiting in both its sales and marketing teams,” said Mr Sowerby.

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