Old Mutual’s Full-Year Profit Falls 8% on Currency Fluctuations

By | February 27, 2015

Old Mutual plc, Africa’s biggest insurer, said 2014 profit fell after the average rate of the South African rand weakened 18 percent against the pound.

Net income from continuing operations declined to 902 million pounds ($1.39 billion) from 980 million pounds a year earlier, the London-based company said in a statement Friday. Adjusted operating earnings per share fell 3 percent on a reported currency basis to 17.9 pence, which still beat the 17.8 pence median estimate of 12 analysts surveyed by Bloomberg.

“We have taken significant steps in building an African financial services champion,” Chief Executive Officer Julian Roberts said in the statement. “Old Mutual Wealth has substantially completed its investment in building a modern U.K. retail investment company with its acquisition of Quilter Cheviot, in addition to Intrinsic earlier in the year. We are already seeing the benefits.”

Old Mutual was formed in South Africa more than 100 years ago and the bulk of its profit still comes from the region. In the past year, Old Mutual agreed to buy U.K.-based Quilter Cheviot Ltd., its U.S.-based asset management unit held an initial public offering in New York, it bought microfinance company Faulu Kenya DTM Ltd. and it sold Skandia units in Germany, Austria and Poland. The insurer is focusing on emerging markets where growth rates may help boost profit.

“We have invested significantly and reallocated capital in our key markets to grow profits over the long term while holding appropriate levels of capital and leverage,” Roberts said. “Our focus for 2015 is on integrating the acquisitions, delivering the operational improvements and creating value from these investments.”

The company, which announced a final dividend of 6.25 pence, gained 0.6 percent to 39.84 rand as of 9:17 a.m. in Johannesburg trading.

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