M&G Shares Slip as Profits Miss Expectations Despite Asset Growth

Positive Net Flows and Higher Capital Reserves Offer Silver Lining

Market Reaction to Profit Miss

Shares in M&G Plc (LON:MNG) dropped by over 2% on Wednesday after the asset manager reported weaker-than-expected profits for the first half of the year. While the company saw a healthy rise in assets under management, operating profits came in below analyst forecasts.

• Adjusted operating profit totalled £378 million
  — 5.1% below consensus expectations of £398.4 million.
• Asset management profit was £128 million
  — almost 10% below forecasts.
• Life business profit came in at £344 million
  — 2.2% under market expectations.

Cost Management and Capital Position

Despite the earnings miss, M&G did show resilience in other financial areas:

• Corporate centre costs were slightly better than predicted at -£94 million.
• Solvency II ratio rose to 230%, beating the 225% consensus.
• Operating capital generation reached £408 million, exceeding forecasts by 4.3%.
• Underlying capital generation stood at £331 million, also ahead by 4.2%.

Growth in Assets Under Management (AuMA)

Total assets under management and administration (AuMA) rose to £354.6 billion, slightly above analyst expectations of £351.8 billion.

• Asset management AuMA: £168.8 billion — up 3% from forecasts.
• Life AuMA: £184.8 billion — slightly down by 1.1%.
• Corporate centre AuMA: Held steady at £1 billion.

Mixed Fund Flows

• Total net outflows were -£2.5 billion — better than the expected -£3.1 billion.
• Asset management net inflows: £2.6 billion — almost four times the £0.7 billion forecast.
• Life business outflows: -£5.1 billion — worse than the predicted -£3.7 billion.
• Flows from M&G’s PruFund business were negative early on, largely due to April’s market volatility, but turned positive in June and July.

Future Outlook

The company has announced plans to launch its With-Profits Bulk Annuity proposition in early 2026, aiming to expand its reach in the institutional space.

“In our view, M&G remains on track with its ambitions, with assets under management and net flows both materially improving,” said analysts at Jefferies.

Conclusion: A Mixed Picture with Long-Term Promise

While M&G's profit figures came in below expectations, the stronger-than-expected asset inflows, robust capital position, and improving trends in fund flows offer optimism. The share price may remain under short-term pressure, but the firm’s strategic developments and future product launches suggest potential for a stronger outlook heading into 2026.

Investors may see this dip as a temporary pullback rather than a long-term concern — particularly if M&G can maintain its momentum in asset growth and capital generation.

Sources: (Investing.com)