Australasian insurer and regional bank operator, Suncorp surprised with a 74% rise in first-half net profit yesterday and boosted interim dividend by a third, or 5c a share, to 20c a share.
Suncorp said first-half net profit was $389 million compared with $223 million a year ago and well above the $366 million estimated by analysts.
But the news failed to move investors with the shares down 2% or 18c to $8.25 by the close.
And while it was boosted by a $63 million in gains from the sale of property and equipment, it was clearly stronger than the 2010 interim which was impacted by a $106 million loss on disposal of interests in various subsidiaries, plus the cost of disasters, such as the first Christchurch quake and storms and floods in Australia.
The profit after tax from business lines was $397 million, up 11%.
After adjusting for amortisation of intangibles and profit from the disposal of corporate buildings, the Group’s net profit after tax was $389 million.
In the previous financial year, deadly floods and storms hit the eastern states of Australia and the second devastating earthquake in New Zealand’s Christchurch (a year ago yesterday) resulted in big insurance claims and forced up reinsurance costs.
The losses also forced Suncorp to boost insurance premiums for many of products in Australia and NZ, and that has flowed through into the latest result.
(Suncorp owns the AAMI, GIO, Suncorp and APIA insurance brands, as well as several smaller lines).
Suncorp said earlier this year that the damage bill from a hailstorm in Melbourne on Christmas Day was expected to cost as much as $250 million, more than its allowance for natural hazards in the six month to December.
First-half revenue of $8.107 billion was up just 0.5% from the previous corresponding period.
‘‘Although external challenges mean that our first-half profit is still not what we, and our shareholders, know this business is capable of, I’m proud of what Suncorp has achieved over the last six months and am confident the transformation of our group is on track,’’ chief executive Patrick Snowball said in a statement.
The General Insurance profit after tax was $162 million. This result was impacted by the Christmas Day hailstorm in Melbourne and that meant natural hazard claims were $149 million above allowances.
As a result, the underlying margin for the half of 11.1% is an increase on the prior corresponding period underlying margin of 10.5%. Gross Written Premium increased 8.2% to $3,855 million for the half.
Suncorp Bank (the old Metway Bank) significantly improved its profit after tax to $102 million for the half year.
In the Core Bank, profit after tax was $156 million. The Core Bank continues to position itself as the genuine alternative to the Majors with a growing direct footprint and improved broker flows.
Growth has rebounded following the Queensland floods and cyclones and above system volumes are expected to continue into 2012.
The Core Bank margin has declined slightly during the half due to the intense competition for retail deposits.
The deposit to loan ratio remains at the top end of the target range of 60% to 70%, and Suncorp Group’s ‘A+’ credit rating provides a diversity of alternative funding sources.
The Core Bank’s cost-to-income ratio has improved and credit quality remains strong with both impairment losses and impaired assets declining.
The Non-core Bank (the ‘Bad’ bank) incurred a loss after tax of $54 million. The run-off of the portfolio continued to progress ahead of expectations with total lending reducing to $5.7 billion.
Suncorp Life has continued to execute its strategy of leveraging the Group’s assets to drive direct sales volumes with Life direct sales increasing by 36%.
Profit after tax was $133 million comprising underlying profit of $69 million and market adjustments of $64 million following the fall in risk-free discount rates. Underlying profit rose 15% in the half year.
No such reticence on the part of investors about the interim result from Super Retail Group which has shown the benefit of the $600 million purchase of the Rebel Sports group from private equity group, Archer Capital, last October.
Earnings jumped 40% for the December half, thanks to the inclusion of Rebel and higher results from the group’s existing businesses.
The shares jumped 6.2% or 39c to $6.681 as investors upgraded their view of the company and its ability to get benefits from the expensive Rebel purchase.
And Super management say they expect the solid first half growth in sales to continue into the current half, after strong start to 2012 trading in recent weeks.
Super Retail’s net profit rose to $34.9 million in the 26 weeks to December 31, 2011, from $24.9 million in the previous corresponding period.
Total revenue and other income rose to $759.8 million, from $562.4 million.
Super Retail declared an interim, fully-franked, dividend of 13 cents a share, up 13% on the previous first half.
The company owns the sports and leisure chains Amart All Sports, BCF (Boating Camping and Fishing), FCO (Fishing Camping Outdoors), Goldcross Cycles, Ray’s Outdoors, Rebel Sport and Supercheap Auto.
In a statement on Wednesday, the company said the result was aided by new products, improved store presentation and inventory management.
Managing director Peter Birtles said the second half had starte
