Slowdown and low rates hit Computershare

Twin headwinds of subdued corporate activity and low interest rates have dragged down the performance of share registry heavyweight Computershare, which recorded a 9.2 per cent drop in full-year profit.

Twin headwinds of subdued corporate activity and low interest rates have dragged down the performance of share registry heavyweight Computershare, which recorded a 9.2 per cent drop in full-year profit.

Chief executive Stuart Crosby acknowledged the past year was tough amid a stalled market for mergers and acquisitions, while further pressure came from losses on the sale of some businesses.

Computershare derives the bulk of its earnings from managing share registries for companies.

It also generates margin income on the $16 billion-plus of client funds it holds on any given day, by investing on the short-term money market.

The company delivered a net profit of $157 million, down from $172 million last year. Even so, revenue increased by 10.2 per cent to $2 billion, up from $1.86 billion last financial year, helped by contributions from its newly acquired American businesses.

"The corporate actions ... have really trended down consistently since the flurry of recapitalisations that immediately followed the global financial crisis," Mr Crosby told BusinessDay.

He said globally low interest rates had hit the company's margin income. And he remains downbeat about the future level of corporate activities, which are central to Computershare's profitability.

"We are very cautious - having got excited on a few previous occasions, only to be disappointed," Mr Crosby said.

Deutsche Bank analyst Kieren Chidgey said Computershare's profit was largely in line with guidance but warned margin income was likely to remain under pressure.

Computershare declared a 14ยข-a-share dividend, which was unchanged from last year, although this was only franked at 20 per cent. Shares closed down 6.3 per cent to $9.75. Over the past year shares in Computershare have jumped 21 per cent on a broader recovery in global markets.

Computershare derives 76 per cent of its revenue outside Australia and last year doubled its presence in the North American market by spending $550 million to buy Bank of New York Mellon's share-owner services division.

BNY Mellon was Computershare's biggest competitor in the US, with each having about a quarter of the market.

Computershare's chief financial officer, Mark Davis, said he expected more cost savings once the integration of the share-owner services division was completed.

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