© Reuters. FILE PHOTO: The logo of the largest Australian investment bank Macquarie Group Ltd adorns the main entrance to its headquarters in Sydney, Australia
By Paulina Duran and Jonathan Barrett
SYDNEY (Reuters) – Macquarie Group (OTC 🙂 raised its earnings forecast Monday, sending stocks to a 12-month high as the large North American energy business benefited from the winter storms in Texas and other states.
Macquarie expects earnings to rise up to 10% for fiscal 2021 after warning two weeks ago that earnings would “decline slightly”.
The energy business, which is supposed to transport large amounts of gas to meet unexpected demand, has single-handedly increased the investment bank’s total profit forecast by around A $ 400 million, analysts said.
“Extreme winter weather conditions in North America have significantly increased short-term customer demand for Macquarie’s ability to maintain critical physical supplies throughout the merchandise complex,” the company said in a statement.
Macquarie is the second largest gas marketer in North America after oil major BP (NYSE :). It buys and moves it along pipelines and networks, typically from an area with low usage to markets with high demand.
The deadly winter storm that crippled infrastructure and left millions of Texans without electricity meant that power producers had to compete for natural gas supplies, which drove prices up in the deregulated market.
The supply crisis brought Macquarie an unexpected stroke of luck.
“Macquarie appears to be benefiting well from volatility and financial market turmoil,” Bank of America (NYSE 🙂 analysts said in a note as they raised their earnings forecasts for the Sydney-based company.
Macquarie’s performance has been hurt by the pandemic over the past year. Subdued business and deteriorating economic conditions led to an increase in impairment losses.
However, a strong IPO of the majority-owned data analytics software business Nuix late last year and a boom in the energy business helped bring the share price back to pre-pandemic levels.
The company, which also operates Australia’s largest wealth management and investment banking business, will receive an extra boost this year due to a rebound in local M&A activity.
Macquarie’s shares rose 4.31% early Monday to A $ 148.39, their highest level since the start of the year, outperforming a broader market that was flat. The share price fell slightly in afternoon trading.
Earlier this month, the Sydney-based financial conglomerate forecast a “slightly” lower profit for the group for the full year than in fiscal 2020.
Macquarie’s Commodities and Global Markets division contributes almost 40% to net income. Previously, analysts had raised concerns that the pandemic could undermine the division’s profits if the high-energy-consuming industry were to close.
Disclaimer: Fusion Media would like to remind you that the information contained on this website is not necessarily real-time or accurate. All CFDs (stocks, indices, futures) and Forex prices are not provided by exchanges, but by market makers. Therefore, prices may not be accurate and may differ from the actual market price. This means that the prices are indicative and not suitable for trading purposes. Therefore, Fusion Media is not responsible for any trading losses you may incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media assumes no liability for any loss or damage caused by reliance on the information contained on this website such as data, offers, charts and buy / sell signals. Please inform yourself comprehensively about the risks and costs associated with trading in the financial markets. This is one of the riskiest forms of investment possible.