Macquarie’s 1H Profit Falls, to Launch Up to A$2 Billion Buyback

SYDNEY—Macquarie Group’s first-half net profit fell by 39%, but the company said its strong capital position means it could soon begin buying back shares worth up to 2.0 billion Australian dollars (US$1.29 billion).

Macquarie, Australia’s biggest investment bank and asset manager, said its net profit for the six months through September fell to A$1.42 billion, from A$2.31 billion a year earlier.

Chief Executive Shemara Wikramanayake said Macquarie’s underlying client franchises were resilient amid less certain market conditions.

“Our annuity-style businesses saw growth in loan books, deposits and assets under management, but the first-half result was substantially down compared to a strong period of realizations in the prior corresponding period,” she said. “Our markets-facing businesses delivered solid performances despite lower market activity and volatility levels.”

Macquarie said its group capital surplus was A$10.5 billion at the end of September, down from A$12.6 billion at end-March. Still, the company said its financial position comfortably exceeded regulatory minimum requirements, allowing it to buy back shares worth up to A$2 billion.

Macquarie’s annuity-style activities contributed A$1.3 billion to first-half profit, although this down 43% on a year earlier. This reflected the timing of asset realizations in green investments in Macquarie Asset Management, which more than offset a positive result in Banking and Financial Services.

Markets-facing activities, which include most of its Commodities and Global Markets businesses, fell 32% on year to A$1.56 billion.

“The prior corresponding period featured a strong performance from commodities in CGM together with material asset realizations in Macquarie Capital,” said the company.

Directors declared an interim dividend of A$2.55 per share, lower than a payout of A$3.00 a share a year ago. Still, that beat under consensus forecasts compiled by FactSet, which projected Macquaries’s interim dividend would be A$2.42.

Macquarie’s net operating income of A$7.91 billion was down 8% on year, while operating expenses of A$5.92 billion rose by 6% on year.

International income accounted for 65% of Macquarie’s total income, the company said

Macquarie, which has a reputation among analysts for conservative forecasts, didn’t provide specific guidance.

LONDON— Anglo American on Friday rejected a $39 billion takeover proposal from rival BHP, saying the bid “significantly undervalues” the company and setting the stage for a potential bidding war.

London-listed Anglo American said the unsolicited proposal, which was made earlier this month and which became public this week, features an unattractive structure that is too uncertain and complex .

Anglo American Chairman Stuart Chambers said the company stands to benefit from its portfolio of assets, including copper, that are likely to experience growth from trends around the energy transition. BHP’s bid, Chambers said, is opportunistic and dilutive for shareholders.

BHP’s all-share offer valued Anglo American at about $38.8 billion, and would have been contingent upon Anglo American spinning off shareholdings in two South African-listed units. The proposal represented a premium of about 31%, not including the South African-listed units, based on Tuesday’s closing prices.

Some analysts had predicted Anglo would find the bid too low and are expecting BHP to return with another. BHP has until May 22 to make a firm offer, though the deadline can be extended. Industry participants expect other large miners to also take a run at Anglo, whose share price has dropped since 2022 as lower commodity prices have ripped through the industry.

A tie-up between BHP and Anglo American, which would be the largest mining deal on record, would illustrate the growing importance of copper, a metal essential to clean-energy products , to a sector that has long relied on Chinese industrialisation to boost profits.

Copper represents some 30% of Anglo American’s output, while BHP counts a majority stake in Chile’s Escondida, the world’s biggest copper mine, among its assets. BHP bought Australian copper-and-gold miner Oz Minerals for $6.34 billion in May last year, representing its biggest acquisition since 2011.

Copper prices are up some 15% so far this year, reflecting expectations that demand for the metal will rise as the world decarbonises and supply will be constrained. Electric vehicles and wind farms use copper in much greater quantities than gasoline-powered cars and coal-fired power stations.

Anglo American has been reviewing its assets in recent months, and has held early conversations with potential buyers for its storied De Beers diamond unit, which it values at more than $7 billion, The Wall Street Journal reported Thursday.

Activist firm Elliott Investment Management holds a stake in Anglo American worth roughly $1 billion, accumulated over several months and before BHP’s move on the miner, according to a person familiar with the matter. The firm is widely known for its campaigns to push companies for change to boost their stock prices. Its view of the Anglo American holding couldn’t be learned.

That said, a jump in Anglo American’s share price following BHP’s takeover offer indicates Elliott has already profited from its holding, potentially reducing any incentive for it to take any action until the outcome of BHP’s bid becomes clearer.

Anglo’s stock on Friday traded above the implied value of BHP’s offer, indicating the market expects a higher bid to emerge.

Macquarie’s 1H Profit Falls, to Launch Up to A$2 Billion Buyback

Net profit for the six months through September fell to A$1.42 billion

U.K.-listed mining giant’s chairman says the proposal undervalues the company