7th Aug 2014 08:14
LONDON (Alliance News) - Old Mutual PLC Thursday reported a drop in first half profit, as the group, which operates across numerous countries from the UK and South Africa to sub-Saharan Africa, was hit by the strength of sterling in the period.
Old Mutual increased its interim dividend to 2.45 pence from 2.10p.
In a statement, the Anglo-South African investment, savings, insurance and banking group said it made a GBP564.0 million pretax profit in the six months ended June 30, compared with GBP805.0 million in the corresponding period last year. Revenue fell by GBP1.68 billion to GBP7.96 billion, while expenses fell by GBP1.45 billion to GBP7.39 billion.
Old Mutual's adjusted operating profit, which is meant to reflect the group's underlying long-term performance and strips out items such as goodwill impairment, fell by 5% to GBP761.0 million. At constant currency, adjusted operating profit rose by 17%.
"While consumers in South Africa face a squeeze on disposable incomes, the good performance across the group's businesses shows that customers continue to trust us to guide them through the critical stages of their lives and financial choices. In all our African markets, we are rolling out new product propositions to consumers across a range of income groups," Chief Executive Julian Roberts said in a statement.
"In the UK, Old Mutual Wealth had a profitable half year and is making excellent progress in building a modern wealth management business that will meet customer demand for innovative and flexible investment products," Roberts said, adding that he believes the business will benefit from changes in pensions rules made earlier this year that put an end to the effective requirement on individuals to buy products, known as annuities, that deliver a regular income every year in retirement.
Turning to emerging markets, the CEO said he expects the external conditions to continue to be challenging in the next six months, particularly given the lower economic growth expectations in South Africa.
"We will focus on what we do best: meeting the needs of our customers through innovative, attractively priced and transparent investment, savings, insurance and banking products as well as continually improving the operating efficiencies of our business," Roberts said. "In common with groups that earn a significant proportion of their profits from outside the UK, we expect the strength of sterling to have an impact on our reported results."
Old Mutual shares were Thursday quoted down 1.4% at 191.20p, making them the fourth biggest faller in the FTSE 100.
By Samuel Agini; [email protected]; @samuelagini
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