By Ben Butler
COMPUTERSHARE chief Stuart Crosby has shrugged off a market mauling over the company's gloomy earnings outlook.
Its shares dived 15 per cent in early trade yesterday, hitting a one-year low of $8.70.
While profit surged more than 15 per cent to $294 million, Mr Crosby is predicting earnings a share will be between 5 and 10 per cent lower in the coming year due to a lack of capital raisings and low interest rates in Europe and the US.
He said the company could have achieved earnings guidance that was ''flat to a little bit off'' by cutting non-essential technology projects but doing so would have made it harder to buy new businesses.
''This is a quiet period and we need to be financially responsible during it, but we also need to make sure we're not throwing overboard the cannons we need in the next fight,'' he said.
He said Computershare's core share registry business was ''solid'' but the lack of volatility in the market meant there were fewer capital raisings.
''A number of the revenue lines that have been good to us and protected us during the global financial crisis have softened,'' he said. ''The recapitalisation of companies around the world was good for us and has slowed down - there's still a little to come out of Hong Kong and Ireland.
''Bankruptcy administration in the US was quite good for us, but Chapter 11 filings have dropped away significantly. The other issue is that interest rates remain down.
''Headline interest rates are dragging along the bottom of the cage in most markets outside here and Canada, which has kicked back a little bit.''
Costs were also set to increase, he said. The company froze wages last year and did not pay bonuses.
''We can't continue that or we'll start to lose people and it wouldn't be right for our employees anyway,'' Mr Crosby said.
Company revenue rose 6.9 per cent, to $1.6 billion, on higher corporate activity in Australia, Hong Kong and India, acquisitions, and increased work on behalf of mutual funds in the US.
But Britain's weak economy weighed on the company, with capital raisings scarce and lower revenue from maintaining share registers.
Mr Crosby said the US and Europe were the markets ''with the most upside'', while Hong Kong's initial public offerings market had gone off the boil.
''Hong Kong is a thin wok. It gets hot very quickly, it gets cold very quickly,'' he said. ''It could go nuts in November, or nothing could happen for two years.''
A final dividend of 14¢ a share, franked at 60 per cent, will be paid on September 14 to investors on the books on August 23. It takes the full-year payout to 28¢ a share.
In heavy trade yesterday, Computershare finished down $1.06, or 10.6 per cent, at $8.94.