Macquarie Bullish On Earnings Outlook

By Glenn Dyer | More Articles by Glenn Dyer

Macquarie Group (MQG) shares hit fresh eight-year highs yesterday after bullish earning’s comments at the company’s annual meeting in Sydney set the shares alight in early trading.

Macquarie shares surged to the high of $86.20, the highest since October 2007, before retracing and shedding most of that gain as profit taking set in.

Macquarie shares ended the day (which was weaker overall), up just 0.4% at $84.81. The early enthusiasm had certainly waned by the end of trading.

But even so, Macquarie shares have had a fabulous 2015, with a gain of more than 40% so so far.

Yesterday’s bullish start to the day came after CEO Nicholas Moore told shareholders that earnings in 2015-16 are expected “to be up” on last year’s $1.6 billion profit.

He said Macquarie expects earnings from its asset management unit will be higher in the year ending March 2016, helped by a weaker Australian dollar and higher performance fees.

Mr Moore said Macquarie, which gets close to 70% of its revenue from outside Australia, is being boosted by the falling Aussie dollar – down 10% so far in this year.

It was really all about the lack of one word in yesterday’s update from Mr Moore.

Earlier this year at the full year reporting announcement, Macquarie said its 2016 full-year result would be “slightly up” on this year’s $1.6 billion profit.

Yesterday the word “slightly” was gone and profits are now forecast “to be up”, but by how much remains to be seen.

Mr Moore said while the impact of future market conditions made forecasting difficult, a strong performance in the first quarter led Macquarie to expect the profit result for the 12 months ended March 31 would be up compared to the result in 2015.

"Both Macquarie’s annuity-style businesses and capital markets facing businesses contributions for the first quarter of the 2016 financial year were significantly up on the first quarter of the 2015 financial year and broadly in line with the prior quarter," Mr Moore said in a statement to the ASX ahead of the AGM in Sydney.

Analysts are expecting a result in the order of $1.8 billion for 2015-16, in line with the record 2008 result.

Macquarie has taken to revealing upgrades during the past couple of financial years as trading activities produced higher revenues and earnings and management has gained a clear picture of trading results.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →