Henderson shocks City with alert on profits

Henderson, the £52 billion City fund manager, today stunned investors with a profits warning. In August, it forecast full-year profits of about £90 million but five weeks later it said it will make less than that.

Shares in the group slumped 13½p to 78p, making them by far the largest fallers in the FTSE 250.

Chief executive Roger Yates, who is leaving next month to climb mountains, cashed in £2 million of shares at 119p each at the end of last month. The shares have lost more than a third of their value since then.

Henderson told the Stock Exchange: "Global market conditions have deteriorated significantly and we have seen high levels of volatility as well as increased client activity."

The group admitted that, like most of the rest of the fund management industry, it had seen a sharp increase in redemptions and withdrawals of its clients' funds. It added: "In light of the prevailing market environment, we are taking actions to protect our business and profitability."

The group confirmed it had started consultation with its staff about further job cuts. About 50 posts have gone since February.

At the half year, Henderson reported a sharp drop of 16% in profits to £51 million. It suffered a major blow when Hugh Osmond's Pearl withdrew £4.8 billion of fund management mandates.

Henderson recently shifted its tax domicile to Dublin.

Yates, who resigned in August but does not hand over to Andrew Formica until November, is highly respected in the fund management industry. The company is due to update the market further in early November.