In many respects the better than forecast 2009 annual profit from AXA Asia Pacific is not very important.
The company, which is subject to offers from the AMP and its parent, and with a second offer from the National Australia Bank for its Australian businesses, yesterday revealed that its 2009 beat analysts’ estimates as earnings picked up in the second half.
They revealed yesterday in a statement with the ASX that it expects net income of about $675 million for the year to December 31, compared with a loss of $278.7 million in 2008.
Seeing there’s a done deal, the high profit is a sign the $13.3 billion offer from the NAB, is well priced.
But could AXA be trying to tempt the AMP into a higher offering? It can’t really offer any more for a few months because it said its losing offer was "final".
Analysts surveyed by Bloomberg had been looking for a figure of around $555 million.
“I am pleased with our strong performance, particularly in the second half of 2009,” AXA Pacific Holdings (AXA APH) Chief Executive Officer Andy Penn said in the statement.
“We have responded well to the impacts of the global financial crisis and the earnings of all of our businesses have accelerated since the first half of 2009.”
However AXA said its full-year operating earnings fell slightly in 2009, mainly on a weaker performance in Australia and New Zealand.
Operating earnings for the year, before auditing and board consideration, were $550 million, compared with $555.6 million in 2008, the company said in the statement.
Shares in AXA APH closed steady on $6.60.
Given the bids for the company and its local operations, share price movements are mostly irrelevant at the moment.
AXA APH said its operating earnings grew in Hong Kong and South-East Asia, but declined in Australia and New Zealand as average funds under management were about 25% lower than in 2008.
Axa’s news followed Commonwealth Bank of Australia trading update late last week which said it expected a 44% rise in earnings in the December half year, with the share market rebound locally playing a major part in boosting returns from its funds management arms.
AXA reported first-half net income of $270.4 million, so it has ridden the strong second half well.
AXA will be announcing its full 2009 results on February 17.
The company said it was still in the process of completing its year end procedures including the completion of the audit and consideration by the board of the final accounts, but it advised "that 2009 profit is likely to exceed analysts’ current forecasts".
"AXA APH expects profit after tax and non-recurring items to be approximately $675 million (2008 – loss of $(278.7) million). Profit after tax and non recurring items includes total Group Operating Earnings of approximately $550 million (2008 – $555.6 million), investment earnings of approximately $185 million (2008 – $(537.7) million) and non recurring items of $57 million (2008 – $(152.8) million).
"Non recurring items include the profit on the sale of 50 percent of AXA APH’s economic interest in India, the resolution of a long outstanding tax matter in AXA APH’s favour related to the sale of NMUK in 1993 offset by restructuring and other one off costs.
"In Hong Kong Operating Earnings are expected to be approximately $330 million (2008 – $290.3 million).
"This reflects growth in Operating Earnings on a local currency basis and the strengthening of the Australian dollar in 2009 relative to 2008.
"Operating Earnings from South East Asia are expected to be approximately $50 million (2008 – $34.9 million) following the continued strong performance and acceleration of growth of these businesses.
"Operating losses from the rest of the Asian region are expected to be approximately $(35) million (2008 – $(40.9) million) reflecting ongoing investments in India, China and Ipac Asia.
"In Australia and New Zealand, Operating Earnings are expected to be approximately $205 million (2008 – $271.3 million) reflecting a much stronger performance in the second half of the year than in the first half.
"Average funds under management were approximately 25 percent lower than 2008 following the global financial crisis. 2008 also benefited from capitalised loss reversals being $33 million dollars higher than 2009," the company said.
But it was a different story for struggling waste management business Transpacific Industries which yesterday warned of a drop of up to 23% in first half earnings due to weaker market conditions.
Transpacific said in an update yesterday that it anticipates operating earnings before interest, tax, depreciation and amortisation (EBITDA) for the six months to December 31 to be between $197 million and $200 million.
Operating EBITDA in the previous corresponding period was $255.7 million.
But the anticipated first half result is higher than in the six months to June 30, however, when operating EBITDA was $191.9 million.
Transpacific expects first half operating EBIT to be between $115 million and $118 million.
Operating conditions
