Despite fierce headwinds from sterling’s strength and weakening premium rates, insurance broker Jardine Lloyd Thompson (JLT) grew its half-year underlying pre-tax profit by 15 per cent year-on-year to £108m. That’s due to a combination of decent organic growth and September’s £156m acquisition of the Tower Watson reinsurance broking business.
Significantly, the emerging market operations are still driving growth. Strip out currency effects, for instance, and the group’s core risk and insurance arm saw revenues grow 20 and 19 per cent respectively in Asia and Latin America. JLT’s operations in most of its more developed markets are making reasonable progress, too, after adjusting for local currency weakness.
But currency is proving to be a significant drag: the strong pound inflicted a £11.2m hit in the first half, and management anticipates further currency pain in the second half. Another worry is softening premium rates - always a worry for insurance brokers, as falling rates tend to drive their commission income down. No wonder management has turned cautious on the trading outlook for the rest of the year.
Broker Numis Securities cut its full-year earnings forecast by 5 per cent. It now expects pre-tax profit of £169m, giving EPS of 50.4p (from £155m and 46.4p in 2013).
JARDINE LLOYD THOMPSON (JLT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,041p | MARKET VALUE: | £2.3bn | |
| TOUCH: | 1,039-1,042p | 12-MONTH HIGH: | 1,106p | LOW: 877p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 158p* | NET DEBT: | 119% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 487 | 85.1 | 27.0 | 10.1 |
| 2014 | 560 | 98.4 | 30.3 | 10.6 |
| % change | +15 | +16 | +12 | +5 |
Ex-div:03 Sep Payment:01 Oct *Includes intangible assets of £523m or 239p a share | ||||
