Macquarie sees more commodities unit strength after profit jumps

By Jaskiran Singh

(Reuters) -Australia's Macquarie on Friday forecast stronger short-term income from its commodities trading business, after the unit tapped volatile oil and gas prices to boost profit in the first half, sending its shares higher.

Financial conglomerates such as Macquarie have benefited from sharp volatility and supply chain disruptions in commodities markets that began in 2020 and increased this year with Russia's invasion of Ukraine.

The Sydney-based firm's Commodities and Global Markets (CGM) segment delivered a net profit contribution of about A$2 billion, 15% higher than last year, thanks to more clients hedging against volatile energy markets. The company also raised its interim dividend.

That powered the financial conglomerate's first-half attributable profit to A$2.31 billion ($1.49 billion), above A$2.04 billion reported a year ago and a Refinitiv IBES estimate of A$2.19 billion.

It bumped up its interim dividend to A$3 per share from A$2.72 a year earlier.

Macquarie's shares rose up to 3.8% to A$172.81, their highest in over a month, while the broader market fell 0.4%.

Chief Executive Officer Shemara Wikramanayake said Macquarie maintains a cautious stance on account of global economic developments, but it "remains well-positioned to deliver superior performance in the medium-term".

Earnings at Macquarie Capital, which runs capital raisings for other businesses, tumbled 12%, however, due to weak market conditions and higher operating expenses.

Macquarie warned transaction activity would be substantially lower in the short-term, compared with record levels seen last year, as steep interest rate hikes to tackle inflation have weighed on global economic growth and discouraged companies from tapping public markets for capital.

Brokerage Citi said results at MacCap and the asset management business were softer than its estimates and looking ahead, "the market will be more reluctant to capitalise commodities strength."

"Ex-CGM, tightening financial conditions look to be impacting the outlook for asset realisations and performance fees, which have been a key driver with commodities of earnings strength in recent years," Citi said.

($1 = 1.5506 Australian dollars)

(Reporting by Jaskiran Singh and Tejaswi Marthi in Bengaluru; Editing by Devika Syamnath and Sherry Jacob-Phillips)