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Our evolving business

Sydney, 15 Jun 2015

Our diverse range of businesses is continually evolving.

Each year, approximately 30 per cent of our income is derived from businesses we have been involved in for less than five years.

At Macquarie, we progressively build expertise in profitable businesses and then pursue new opportunities in adjacent activities and new geographies.

Through this approach, we have evolved a uniquely diversified global business. Our activities vary across countries and regions, highlighting our ability to deliver initiatives tailored to client needs in a given location or market environment.

We have built a wide, specialist business in a range of industries including resources, agriculture, commodities, energy and infrastructure, based on decades of experience in these sectors, and have a particularly strong base in Asia-Pacific, the world’s largest growth region.

We have also developed strong capabilities in other sectors including real estate; telecommunications, media, entertainment and technology; financial institutions; and industrials. And we have built robust businesses in corporate lending, asset finance, debt capital markets, principal investment and retail financial services.  

A global organisation, our geographic diversity provides strength. Macquarie operates in 28 countries, with 70 per cent of our income generated outside Australia, compared with 52 per cent just five years ago.


Operating income by region 1
Year to 31 March 2015

Our strong balance sheet enabled us to acquire a number of US businesses during and after the global financial crisis, enhancing our position in the world’s largest capital market.

For the past two years, the Americas has been the largest contributor to the Group’s income, accounting for 36 per cent of our operating income in the year to 31 March 2015.

We have developed a strong energy and infrastructure presence in the Americas, a differentiated advisory and capital markets offering and are connecting US companies with growth opportunities in Asia. We are also ranked by Platts as the third largest physical gas marketer in North America.

Our Europe, the Middle East and Africa business has leading expertise in infrastructure, transport, resources, commodities and energy with niche expertise in adjacent business areas. We manage more than 40 infrastructure and real estate businesses in the region, are the UK’s largest independent owner and manager of gas and electricity assets and our London-based commodities research team is ranked No.1 globally.

Our experience in our local region of Asia, dating back 46 years, means we have the knowledge and networks to connect this region to the rest of the world. We have facilitated many cross-border transactions in the region and have a strong securities presence, with almost 1,000 stocks under research coverage.

In Australia, we have established market leading positions in advisory and capital markets, equities research, financial markets and securitisation. With $A486 billion in assets under management globally, we are the largest Australian-headquartered global asset manager, one of the largest providers of motor vehicle finance and have built a retail financial services offering which services 1.1 million clients.

Our diversified portfolio of activities has enabled us to adapt our business for varying market conditions. It has contributed to our 46-year record of unbroken profitability and our consistently strong returns to shareholders.

Our total shareholder return 2 – 39 per cent for the year to 31 March 2015, 111 per cent over 5 years, 159 per cent over 10 years and 2,583 per cent since listing on the Australian Securities Exchange in July 1996 – leads our industry and the top 50 companies in Australia when Macquarie was listed.

The strength of our diversity has been particularly apparent in the challenging global markets of recent years. We adapted our portfolio mix for the prevailing conditions. The stability of our income during this period differentiated us from many of our peers.

Today we have two main business groupings:

  • Annuity-style businesses, which typically provide more steady and certain income streams. These include our asset management, asset finance, corporate lending and retail financial services businesses; and
  • Capital markets-facing businesses, which are typically transaction based and influenced by financial market conditions. These include our securities, advisory and capital markets, principal investing and commodities and financial markets businesses.

Net profit contribution by business type 3


Year to 31 March 2008


Year to 31 March 2015

 

In the challenging market conditions of recent years, we have significantly grown our annuity-style businesses while continuing to position our capital markets-facing businesses for an improvement in market conditions.

Our latest result reflects the return on this investment.

The net profit contribution from our annuity-style businesses has more than tripled over the past eight years to almost $A3 billion in the year to 31 March 2015, including a 33 per cent increase over the past year.

This has helped buffer the impact of less favourable market conditions on our capital markets-facing businesses since the global financial crisis.

We have continued to invest in these businesses knowing market conditions would eventually improve and confident in the potential of these longstanding franchises – and the experienced teams within them – to capitalise on an upturn.

The success of this approach was confirmed in our most recent results. Our capital markets-facing businesses increased their net profit contribution by 19 per cent during the year, highlighting the strength of these businesses and their ability to capitalise on improving market conditions.

Macquarie’s deep expertise in major markets, proven risk management framework and strong and conservative balance sheet are key strengths of our organisation.

Our ability to adapt the business portfolio mix in response to varying markets, along with our embrace of opportunity, have contributed to our history of growth and will be fundamental to our continued success.