- Core operating profit up 6% to £859 million
- Shares up 10% year-to-date
- 2% increase in interim dividend per share
Shares in Legal & General (LGEN) fell more than 3% to 253p despite the financial services and asset management group reporting a 6% increase in core operating profit to £859 million for the six months ending 30 June. This was at the top end of its targeted 6%-9% growth target and ahead of consensus expectations.
The FTSE 100 firm said it had been making strategic focus with the agreed sale of its protection business and partnership with Japanese insurer Meiji Yasuda for $2.3 billion announced back in February.
The company also announced a 2% increase in interim DPS (dividend per share) to 6.12p, in line with the company’s guidance, and confirmed that 90% of its £500 million buyback is complete.
SHARE PRICE FALL
Investors sent the shares lower after a decent run coming into the results, as they focused on slower first-half growth in its asset management business and an escalation in group borrowing costs.
The company reported a 6% fall to £202 million in core operating profit from its asset management business (compared to £214 million last year) and first half group debt costs of £112 million up £5 million from last year.
WHAT DID THE CEO SAY?
CEO António Simões said: ‘We are growing and making the most of the synergies between our three businesses. Institutional retirement operating profit is up double digits, and we have written over £5 billion of new business at low capital strain.
‘We have seen material progress in asset management, with positive annualised net new revenues driving a further increase in our average revenue margin, which is now close to our double-digit ambition. In retail, our customer base has grown to 12.4 million, and workplace pension assets have surpassed £100 billion.’
MODEST BEAT OF EXPECTATIONS
Danni Hewson, AJ Bell head of financial analysis said: ‘After a decent run for the shares, a modest beat of expectations was not enough to get investors excited about Legal & General.
‘The company is benefiting from significant growth in the pension buyout market where firms pay insurers to take on their pension liabilities.
‘Having already sold its US protection business and announced a partnership with Japanese insurance giant Meiji Yasuda, CEO António Simões is continuing the process of reshaping the business after more than 18 months in the hot seat.
‘The market reaction to these solid but unspectacular numbers shows investors are likely to keep Simões on his toes.’
LEARN MORE ABOUT LEGAL & GENERAL
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell.
