Macquarie sees higher income from commodities arm, logs record profit

(Reuters) -Australia’s Macquarie Group (OTC:) on Friday forecast higher short-term income from its lucrative commodities trading business as price volatility and increased hedging boosted the company’s annual profit to a record high.

The Ukraine war and unpredictable weather in North America have turned Macquarie’s oil, gas and power exchanging unit into a strong profit-making segment, even if prices fall, due to elevated risk management levels and improved trading.

The Sydney-based firm’s Commodities and Global Markets segment posted a net profit of about A$6 billion ($4.02 billion), 54% higher than last year, as more customers hedged against volatile energy markets.

In the short term, the company expects consistent contributions from client and trading activity in the financial markets platform.

Chief Executive Shemara Wikramanayake said Macquarie’s diversified global operation across annuity-style and markets-facing businesses set the stage for “superior performance” in the medium term.

The financial conglomerate’s profit attributable for the year ended March 31 came in at A$5.18 billion, up from A$4.71 billion a year ago, beating a Visible Alpha consensus estimate of A$4.96 bln.

It also bumped up its final dividend to A$4.50 per share from A$3.50 per share a year earlier.

However, earnings at Macquarie Capital, which runs capital raisings for other businesses, tumbled 47% as the unit logged lower fees due to bleak market activity.

($1 = 1.4932 Australian dollars)