viewChallenger Ltd

Challenger half-year result in line with recent January guidance

The company is an investment management firm with two core businesses.

pen on paper that says financial results
It has a funds management division and an annuity division known as Challenger Life

Challenger Ltd (ASX:CGF) told the market on 23 January 2019 that is expected to report normalised net profit before tax (NPBT) of $270 million for the December half.

This morning, Challenger has kept its word and revealed normalised NPBT of $270 million, down 2% on the prior corresponding period (pcp) and normalised net profit after tax of $200 million, down 4% pcp.

Total assets under management were $78.4 billion, up 2% on the pcp but down 3% from the $81 billion reported in August 2018.

Challenging environment but FY19 guidance unchanged

Challenger’s CEO Richard Howes said the result reflected the challenging operating environment but maintains FY19 NPBT guidance of $545 million to $565 million.

Howes added: “Our results for the first half have clearly been impacted by the difficult operating environment we’re experiencing, with increased market volatility, industry disruption and political uncertainty playing out across the sector.

“While some of these factors are beyond our control, the fundamentals underpinning our business remain supportive.

Leading brand, capital position strong

“We continue to target a growing market of retirees, we have the leading retirement income brand in the country and our capital position remains very strong.

“Our resilient position is well demonstrated by the solid domestic annuity sales we achieved in the half.

“Australian annuity sales were up 4% on the same period last year, reflecting the continued demand from retirees for our products.

“In our Funds Management business, growth in net income driven by higher average funds under management was partially offset by lower performance fees, which is consistent with what we have seen across the industry.

$1.4 billion excess capital demonstrates strength

“We retain a strong capital position with $1.4 billion of excess regulatory capital and group cash, and Challenger Life has a PCA2  ratio of 1.54 times, which is toward the upper end of our target range.

“This demonstrates the strength and resilience of our business in these market conditions.

“Challenger is well placed to manage through the cycle and capture the opportunities for growth we see ahead.”

Quick facts: Challenger Ltd

Price: 3.72 AUD

Market: ASX
Market Cap: $2.51 billion

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