Old Mutual profit slumps
Johannesburg Stock Exchange (JSE) listed financial services giant, Old Mutual Limited (OML), is downbeat about its full year profitability due to the challenging economic environment that prevailed.
In a preliminary operating update for the year ended December 31 2020, the group indicated headline earnings per share (HEPS) will be more than 20 percent below prior year.
“Shareholders are advised that we expect HEPS and EPS for the year ended 31 December 2020 to be more than 20 percent lower than the reported HEPS and EPS for the comparable period (FY 2019 HEPS: 236,1 cents, FY 2019 EPS: 208,3 cents) due to the significant impact Covid-19 has had on our business operations and results,” said the group.
The world over, businesses were affected by the adverse impacts of the Covid 19 pandemic which resulted in reduced trading hours as countries implemented various levels of lockdowns to limit its spread.
Explained OML: “Operating conditions across our business have remained challenging during the second half of 2020. Despite the tough economic and operating environment many of our volume related KPIs have shown recovery in the second half, demonstrating the resilience of our franchise.”
In line with this, gross flows for the full year came in 10 percent up to R188 billion.
Positive NCCF of R10,1 billion is R7,0 billion higher than the prior year, driven by strong investment flows across the Group in the second half of the period, which were partially offset by higher outflows in Old Mutual Corporate as a result of the deteriorating economic environment.
“We have also seen continued improvement in adviser productivity with sales trending towards historic levels. Whilst there are encouraging signs of recovery in our sales metrics, we are concerned about the rapidly increasing rate of Covid-19 infections in our key geographies and the impact that the pandemic could have on our customers, economic recovery, and mortality rates,” said OML.
Meanwhile, the group has started finalising all outstanding valid claims for business interruption for affected customers following the outbreak of the Covid 19 pandemic.
The group forecasts net business interruption and business rescue reserves reported for the year ended December 2020 will increase by between R85 million to R140 million compared to the amount reported for six months ended 30 June 2020.-ebusinessweeklu.ci
