Magellan share price rockets 13% amid improving FY24 outlook and special dividend

Magellan shares are rocketing following the release of the ASX 200 fund manager's FY 2023 results.

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The Magellan Financial Group Ltd (ASX: MFG) share price is soaring higher today, up 13%.

Shares in the S&P/ASX 200 Index (ASX: XJO) funds manager closed yesterday trading for $9.20. In morning trade on Friday, shares are swapping hands for $10.39 apiece.

For some context, the ASX 200 is down 0.05% at this same time.

This follows the release of the company's full-year results for the financial year ending 30 June (FY23).

Read on for the highlights.

Magellan share price leaps on special dividend and company reset

  • Average funds under management of $48.8 billion, down 48% from FY22
  • Statutory net profit after tax (NPAT) of $183 million, down from $383 million in FY22
  • Adjusted diluted earnings per share of 95.5 cent, down 56% year on year
  • Interim and final dividends plus performance fee dividend of 86.7 cents per share, down 52% from 179.0 cents per share in FY22
  • Special dividends of 30 cents per share; none were paid in FY22

What else happened during the year?

ASX 200 investors look to be bidding up Magellan share price with the company reporting that, following success with its FY23 reset, it is now at the next stage of its evolution, with solid progress made executing its five-year strategy.

FY23 Funds Management business operating expenses came in at $121 million. That's below the company's guidance range of $125 million to $130 million.

Net cash flows from operating activities were $187 million, and Magellan had no debt as at 30 June.

Management also reported the on-market share buyback will be extended by 12 months to April 2024, likely offering a boost to the share price today.

For the six months ended 30 June, the board declared a final dividend of 35.6 cents per share and a performance fee dividend of 4.2 cents per share. In light of the strong balance sheet, the board also declared a special dividend of 30 cents per share.

The Magellan share price may also be getting a boost after the company reported on the ongoing changes as part of its board renewal process.

Recent shakeups include:

  • Andrew Formica appointed independent non-executive chair, MFG
  • Hamish McLennan transitions to the role of deputy chair and non-executive chair, MFG
  • Robert Fraser retires from MFG board; remains chair of the main operating subsidiary, Magellan Asset Management Limited
  • Appointment of Deborah Page AM as non-executive director to the MFG and MAM Boards

What did management say?

Commenting on the results sending the Magellan share price sharply higher today, CEO David George said:

We have made a solid start to implementing our five-year strategy and have laid a foundation that can return us to growth in time…

Our primary focus has been on delivering the investment performance we are known for, and we are encouraged that the changes we have made during the year have resulted in improved collaboration, information flow and efficiency. Investment ideas are being brought forward earlier and prioritised more efficiently.

What's next?

Looking to what might impact the Magellan share price in the year ahead, George said:

We anticipate further cost benefits from changes made to flow through in FY24 and onwards, with our FY24 Funds Management business operating expenses expected to be between $95 million to $100 million.

FY23 Funds Management business operating expenses were $121 million.

George added:

While we are only one year into our five-year strategy and there is much work to do, we are confident Magellan can evolve into a diversified global fund manager of scale that delivers ongoing sustainable growth and attractive shareholder returns.

Magellan share price snapshot

With today's big intraday lift factored in, the Magellan share price is up 19% in 2023. Shares remain down 25.8% over 12 months.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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