As expected the long list of natural disasters in Australia and NZ in the past year have hit Suncorp Group Ltd’s full year profit hard, thanks to its heavy concentration on insurance through its GIO, Suncorp AAMI and other businesses.
Earnings for the year to June fell 42% thanks to the surge in claims and re-insurance costs arising from natural disasters such as the two Christchurch earthquakes, the Brisbane and southeast Qld floods, cyclones, floods elsewhere in that state, Northern Victoria and parts of NSW.
Suncorp said yesterday that net profit for the year to June 30 was $453 million, down from $780 million in the 2010 financial year.
Revenue rose 21.4% from the previous year to a record $19.03 billion.
Suncorp declared a fully franked dividend of 20 cents per share, taking the full year payout to 35 cents per share, unchanged from last year.
Directors said that despite the losses from the natural disasters, the group’s financial strength had improved.
"Given the strength of the Group’s capital position, the Board has increased the target dividend payout ratio to 50% to 70% of cash earnings (excluding divestments).
"The final dividend of 20 cents meant the total dividend payout for the year was at the top end of the increased payout ratio.
In a letter to shareholders, Suncorp Chairman John Story reiterated the Board’s policy that capital excess to the operational needs of the business would be returned to shareholders when it was prudent to do so.
"We originally anticipated a return of capital to shareholders at this result but, given the recent upheavals on global financial markets, the Board has decided to retain the full amount of our surplus capital as a further protection against short term uncertainty and volatility," Mr Story said.
Suncorp’s general insurance business saw net profit fall to $392 million in the year to June, from $557 million in the previous year.
The NZ quakes saw a loss of $203 million across the Tasman in 2011, compared with a profit in 2010 of $70 million.
During the year the company managed over 100,000 claims relating to floods, cyclone Yasi, earthquakes and other natural disasters, worth about $4 billion, the company said.
The claims were worth $325 million more than the company had allowed, and Suncorp incurred additional reinsurance costs of $232 million.
Gross written premium increased by 3.6% from the previous year to $7.3 billion.
The "good" part of the banking business saw a dip in profit to $259 million, down from $268 million. The ‘bad’ part of the bank lost $175 million after tax (down from $222 million in 2010 financial year)
Suncorp also announced that chief executive Patrick Snowball would move from a fixed term employment contract to a rolling contract.
Mr Snowball’s employment was previously for a fixed term ending on 31 August 2013.
As part of the transition to a rolling contract, Mr Snowball has stated his intention to remain with Suncorp until at least 2015.
Derails of his contract are here.
Comments by Mr Snowball about how well placed financially the group was, helped boost the shares.
The shares jumped more than 6% in early trading to a day’s high of $7.69. They ended at $7.59, up 40c or 5.5%.
Also helping was a feeling in the market that the result was better than feared, with no more losses on the NZ quakes or the Qld floods being revealed.
Takeover target, Macarthur Coal has ridden out the massive disruption from floods and heavy rain in 2010-11 in solid fashion.
The floods and ran cut production and exports from the company’s central Queensland mines from late 2010 until now, and possibly exposed it to takeover activity.
The company is facing a hostile joint bid from Peabody Energy of the US and the world’s biggest steel group, Arcleor Mittal, at $15.50 a share, plus the final dividend of 16c a share.
The floods saw exports stopped for a while as the company called force majeure on its export contracts. Shipments have resumed slowly, like the rest of the industry and it’s estimated that they won’t be fully recovered until early next year.
As a result spot prices for coking, thermal and pulverised coal injection quality product (which Macarthur specialises in) soared to near record levels from the first quarter onwards, and remain high.
As a result Macarthur’s profit edged up to $142.4 million for the year from $139.1 million in 2010: not much, but as production and sales fell 24.2% and 26.5% respectively in the year to June, not a bad effort.
The company sold down stocks and dewatered mines and waited until mines were dried out and operational.
Including the profits on asset sales (shares in two of its mines) earnings were up 93% at $241.4 million for the 12 months to June 30, from $125 million in the 2010 year.
Revenue increased by 2.5%, to $687 million.
The company declared that final dividend of 16 cents, fully franked which took the total for the year to 60c a share from the 40c paid in 2010.
Macarthur said it would be sending out its defence documents to t
