By Savyata Mishra

(Reuters) – Australia’s Macquarie warned Friday of a significantly lower income in its commodities trading arm. It also forecast that transaction activity at the capital business will ease from records levels in the short term. This sent its shares down almost 6%.

Additionally, the company stated it expected its short-term projections to be affected if there is a surge in inflation or rising interest rates.

Shemara Wikramanayake stated, “We will continue to keep a cautious attitude, with conservative approaches to capital, funding and liquidity that positions our well to respond to current circumstances.”

By 1207 GMT, shares were at 5.6% of A$191.34 and the market was down 2%.

Macquarie’s dim outlook is despite the fact that volatility in the commodity market caused by Russia-Ukraine War and higher fees from advising clients on deals saw Macquarie surpass annual profit expectations.

The Ukraine crisis and volatile oil prices led to a surge in commodities and global markets for its CGM arm. Macquarie Capital, which advises on many of Australia’s biggest transactions, was also a major driver of their Macquarie Capital unit.

Macquarie, the largest infrastructure investor in the world, stated that earlier this year it had also benefited from large asset sales to infrastructure and other areas.

In the 12 months to March, income from CGM grew 50% to A$3.91 Billion ($2.78 Billion). Macquarie Capital earned more than three times as much, at A$2.40 trillion.

The company saw its attributable profit rise 56% to A$4.71billion, surpassing a Visible Alpha consensus estimate of A$4.45billion.

The final dividend was A$3.50 per shares, an increase of A$3.35 per year.

($1 = 1.4049 Australian dollars)