NWL -5.57%: shares were lower on slightly weaker than expected FY24 earnings, though FY25 has started well by the look, and indications around flows look positive.
- NPAT of $84 million, was up +24% yoy, but 3% below consensus.
- The miss was due to lower-than-expected revenue margins, which is due to 1. larger accounts which have lower % fees with Fee caps kicking in on more FUA 2. Lower cash balances where NWL skim a margin from.
- Offsetting to some degree, is a stronger outlook for net inflows with advisor numbers increasing which is a precursor to more FUA
- July saw net flows of $1.2bn, and it’s a seasonally weaker month. Based on that trend, cautioning that it’s only one month, to FUA upgrades for FY25 seem likely.
Softer result, though decent trends for the year ahead, however we still think that the business metrics have peaked, and replicating from here will be harder, which will see their elevated valuation fall.
MM is neutral on NWL
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