Unfortunately, Old Mutual's (OML) half-year performance was again thumped by Rand weakness. But adjust for that and operating profit jumped 17 per cent year-on-year to £761m, which was largely in line with analysts’ estimates.
Significantly, the challenges facing South Africa’s strike-ridden economy - the country’s central bank estimates that economic growth will reach just 1.7 per cent in 2014 - don't appear to be hurting Old Mutual. Banking arm Nedbank, for instance, saw operating profit rise 17 per cent to R6.4bn (£357m), and impairments have continued to fall. The bank is solidly capitalised, too, with a Basel III-basis tier one capital ratio of 12.1 per cent. Moreover, operating profit at the group's Africa-focused emerging markets life and savings unit rose 22 per cent to R5.2bn, with especially strong growth in the South African 'retail affluent' market.
In the UK, meanwhile, the Budget day decision to axe compulsory annuity purchases could provide a boost for Old Mutual. The group doesn't sell annuities in the UK, but is "a big player in the income drawdown market", explains chief executive Julian Roberts. Such products are set for strong demand as a result of the change. Mr Roberts adds that Old Mutual’s pension transfer enquiries have doubled since the announcement.
UBS expects full-year adjusted EPS of 18.6p (from 18.2p in 2013) and year-end embedded value of 218p per share.
OLD MUTUAL (OML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 189.1p | MARKET VALUE: | £9.3bn | |
| TOUCH: | 189.1-189.2p | 12-MONTH HIGH: | 211p | LOW: 168p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 144p* | EMBEDDED VALUE: | 205p | |
| Half-year to 30 Jun | Gross premiums (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 2.00 | 805 | 9.1 | 2.1 |
| 2014 | 1.60 | 564 | 4.7 | 2.45 |
| % change | -20 | -30 | -48 | +17 |
Ex-div: 21 Sep Payment: 31 Oct *Includes intangible assets of £2.5bn, or 51p a share | ||||
