Global and Australian insurance giant, QBE is lifting its final and annual dividend by a third or more for the year to December, despite a 7% dip in net profit and the impact of the strong US dollar.
QBE told the ASX this morning before trading that net profit for the year was $US687 million, down from the $US742 million for 2014. Revenue eased 9% to $US16.57 billion from $US18.22 billion.
Interim dividend was raised to 20 cents a share from 15% (up a third), the final was boosted from 22 cents a share to 30 cents in this morning’s report.
The total of 50 cents a share took the payout back to 2012 levels.
Directors said the insurance result was at the middle of the target range, while the adjusted underwriting result was at the top end of the range.
The combined operating revenue of 94% was at the better end of the target range of 94% to 96% (A combined operating ratio of less than 100% means the insurer was profitable at the underwriting level, above 100% they lost money selling and underwriting insurance).
They said the company faces tough trading conditions, not helped by the weaker Australian dollar and the continued low interest rate environment.
Directors said that adjusting for the disposal of the workers compensation business in Argentina and other the one off impact of the sale of other “non-core” operations, adjusted net profit rose 1% to $US807 million, or 12% on a constant currency basis ( which attempts to smooth out the movement in currencies over a period to produce a comparable result. Brambles also had a similar experience in the December half year.
Cash profit was $US892 million, up from $US821 million, but on a constant currency basis, the rise of 12%.
“It is noteworthy that we produced our result in the face of a number of headwinds, including challenging insurance pricing and investment markets, a significantly stronger US dollar and continued low interest rates,” QBE CEO, John Neal said in this morning’s statement to the ASX.
