By Savyata Mishra
(Reuters) – Australia’s Macquarie on Friday warned of significantly lower income from its commodities trading arm and forecast transaction activity at its capital business to ease from record levels in the near term, sending its shares almost 6% lower.
The company also said it expects its short-term projection to be affected by geopolitics, surging inflation, and rising interest rates.
“We continue to maintain a cautious stance, with a conservative approach to capital, funding, and liquidity that positions us well to respond to the current environment,” Chief Executive Officer Shemara Wikramanayake said.
Shares of the company were down 5.6% at A$191.34 by 1207 GMT, while the broader market slipped 2%.
Macquarie’s dim outlook came even as volatility in the commodities market, caused by the Russia-Ukraine war, and higher fees and income from advising on deals helped the financial conglomerate beat annual profit estimates.
Its commodities and global markets (CGM) arm was boosted by a Ukraine crisis-led volatile rally in oil and natural gas prices, while its Macquarie Capital unit benefited from advising on some of the biggest deals in Australia, including the $17 billion buyout of Sydney Airport and Santos’ $6 billion purchase of rival Oil Search.
Macquarie, the world’s top infrastructure investor, had said earlier this year that it also profited from significant asset sales in infrastructure and other sectors.
Income from its CGM business jumped 50% to A$3.91 billion ($2.78 billion) in the year to March. Earnings at Macquarie Capital more than tripled to A$2.40 billion.
That helped the company’s attributable profit surge 56% to A$4.71 billion and top a Visible Alpha consensus of A$4.45 billion.
It declared a final dividend of A$3.50 per share, up from A$3.35 per share a year earlier.
($1 = 1.4049 Australian dollars)
(Reporting by Savyata Mishra and Riya Sharma in Bengaluru; Editing by Aditya Soni and Uttaresh.V)
