Struggling wealth manager AMP has provided a mixed half year update as it attempts to get on the front foot after several bruising months of poor publicity and weak share price.
The company told the ASX on Friday morning that it is looking at a June 30 first-half underlying profit in the range of $490 million to $500 million, with growth across its core business to be offset by more losses in troubled Australian wealth protection.
The result will include a $290 million after-tax provision for potential remediation relating to advice provided from July 2008 to January 2009.
The first-half guidance compares to an underlying profit of $553 million a year ago.
Interim dividend has not been set, but AMP warned it could be lower than expected.
AMP said it "is targeting a total FY 18 dividend payout at the lower end of the 70-90% guidance range.
"To retain capital and strategic flexibility over the coming period, it is expected that the interim dividend may be outside this range,” the AMP said
How far “outside” that range wasn’t stated.
In other words, like shareholders in Seven West Media, Metcash and Qantas, AMP shareholders pay the price of dud managerial and board decisions.
AMP’s acting CEO Mike Wilkins said in the statement:
“Today’s announcement reflects our commitment to take decisive action to reset AMP and establish a platform from which the business can recover rapidly. We’re facing squarely into the issues that have impacted our reputation and the community’s confidence in AMP.
"As part of its continuing commitment to customers and reflecting plans for the simplification of its superannuation product offering, AMP has today announced fee reductions to its flagship MySuper products.
"These reductions will improve member outcomes, reducing fees for around 700,000 existing customers, and enhance the competitiveness of AMP’s MySuper product suite.
"Pricing reductions will be implemented in 3Q 18. AMP continues to work towards rationalising the number of products offered, reducing operational complexity and enabling greater product scale to compete more effectively.
"The customer-focused fee reductions announced today will have no impact on the 1H 18 result but are expected to lower Australian wealth management investment related revenue (IRR) by an annualised A$50 million from FY 19. 2H 18 Australian wealth management IRR is expected to be reduced by A$12 million,” Wilkins said.
