By Rishav Chatterjee and Byron Kaye
(Reuters) - Macquarie Group (OTC:MQBKY), Australia's biggest investment bank by assets, posted first-half profit on Friday that fell short of analyst estimates as stabilising energy markets squeezed the commodities trading unit, its main earner, sending its share price sharply lower.
Profit for the six months through September jumped 14% to A$1.61 billion ($1.06 billion) as the bank collected on the sale of data centre giant AirTrunk. Still, that was short of the A$1.73 billion average analyst estimate from market data aggregator Visible Alpha.
Its commodities trading division - an earnings engine in recent years as extreme weather in North America and Russia's invasion of Ukraine upended energy markets - saw its profit contribution shrink by 5% due to what it called a return to muted trading conditions.
"It's been meaningful, the reduction and the management of demand, and the storage and supply that people are sitting with," CEO Shemara Wikramanayake said on a call with analysts, referring to energy trading.
Macquarie's commodities trading unit benefits when clients hedge investment positions to protect against future volatility. The company flagged lower income from the division in the short term and declared an interim dividend of A$2.60 a share, versus A$3.85 a year earlier.
Its share price was down as much as 4.5% to A$221.11 by midsession trade, contributing to a broader market decline of 0.9%.
"With an earnings miss, downgraded guidance and dividend cut, we expect the stock to trade down today," Citi analysts said in a client note.
Wikramanayake said she expected higher investment-related income from Macquarie's asset management unit, which sold a share of AirTrunk in September, noting on the call that the bank still had "quite a portfolio of data centres".
Macquarie has "some realisations planned for this year", she said, without giving specifics.
Macquarie extended its A$2 billion buyback for an additional year.
($1=1.5198 Australian dollars)