Macquarie Group CGM Unit Unlikely to Outperform Again Next Year, CEO Says

SYDNEY--Macquarie Group Ltd.'s (MCQEF) commodities and global markets unit is unlikely to repeat the standout fiscal 2021 performance that helped drive record profits at the Australian financial services company, Chief Executive Shemara Wikramanayake says.

In an interview with Dow Jones Newswires on Friday, Ms. Wikramanayake said dislocation in markets has traditionally provided the unit, known as CGM, with opportunities, pointing to the oil price volatility seen between the first and the second halves as an example.

CGM's total profit contribution rose more than 50% to 2.6 billion Australian dollars (US$2.04 billion) in the 12 months through March, Macquarie said in its full-year results.

The CGM business was the beneficiary of extreme winter weather in North America that helped its inventory-management and trading income increase more than four-fold to A$976 million from A$178 million. Strong results were also recorded in CGM's oil, North American gas & power, and precious metals units.

CGM's fiscal 2021 result included gains of A$A232 million associated with the timing of income recognition on oil-and- gas storage contracts and transport agreements.

Ms. Wikramanayake said Friday that she now expects CGM's inventory-management and trading income to fall significantly. However, the CEO said other parts of the group would likely fill any gaps left by the commodities business if it isn't able to repeat the performance that helped drive the company to a record A$3.02 billion full-year profit.

"We said expect that from Macquarie Capital which is an advisory and principal investing business where you've seen as with other big banks in the U.S., the level of activity in transaction and investment realization has really stepped up compared to the first quarter of our financial year," she said.

Different parts of Macquarie's portfolio are "firing at different times," Ms. Wikramanayake said, "which is why I think, compared to a lot of our global peers, we've managed to maintain mid-teen return on equity throughout the cycle because of the diversity of our portfolio business, not just with CGM, but across the whole of Macquarie."

Write to Alice Uribe at alice.uribe@wsj.com

Corrections & Amplifications

This article was corrected May 11, 2021 to reflect that CGM's total profit contribution rose more than 50% to 2.6 billion Australian dollars (US$2.04 billion) in the 12 months through March, Macquarie said in its full-year results. The original version incorrectly specified CGM's profit contribution.


  (END) Dow Jones Newswires
  05-07-21 0256ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

News, commentary and research reports are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.