By Louis Goss
Abrdn on Wednesday said it plans to lay off around 10% of its entire workforce in a bid to cut its annual costs following a brutal second half of 2023 that saw clients pull GBP12.4 billion out of accounts held with the firm’s investment arm.
In a trading update, the Edinburgh headquartered investment company outlined plans to cut around 500 jobs as part of a wider cost-cutting initiative aimed at saving GBP150 million by the end of 2025, with a view to boosting the profitability of its investments division.
Shares in Abrdn increased 4% on Wednesday having lost 14% of their value over the previous 12 months.
Abrdn said 80% of the job cuts would be made inside its investment segment as it explained its cost saving plans would see it save money by reducing overheads in its support services operations, outsourcing more of its functions, and cutting out entire layers of management.
First established in 1825, Abrdn consists of three separate units, covering its asset management business, its business providing support to financial advisors, and its personal division which owns consumer investment platform Interactive Investor.
Abrdn said it is now aiming to cut its costs in a bid to ensure its investment business returns to an “acceptable level of profitability” after the active asset manager generated GBP26 million in adjusted profits in the first half of 2023, compared to GBP127 million in the first half of 2022.
“Although our business model benefits from the diversification that comes from operating three businesses, we will not rest until all of them are contributing strongly to group profitability, as Adviser and interactive investor have done in 2023,” Abrdn CEO Stephen Bird said.
The drop in profits from Abrdn’s investment business followed a sharp decline in its revenues, from GBP1.07 billion in the first half of 2022 to GBP466 billion in the same period in 2023, as the business suffered in the face of high levels of inflation and geopolitical uncertainty.
As of December 31 2023, the three units of Abrdn’s business had GBP494.4 billion in assets under management and administration (AUMA), marking a 0.8% drop on the GBP500 billion it controlled at the end of 2022.
“Market conditions have remained challenging for our mix of business, and this is reflected in our year-end AUMA, flow numbers, and margins,” Bird said.
-Louis Goss
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01-24-24 0725ET
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