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AMP Limited reports $1.1 billion profit: What you need to know

Leading insurance and wealth management company AMP Limited (ASX: AMP) has reported an underlying net profit of $1.1 billion for the 12 months ending December 31 (AMP operates on a calendar year basis).

Here are the key points investors need to know:

  • Underlying profit up 7% to $1.1 billion (statutory profit increased 10% to $972 million)
  • A 4% increase in the final dividend to 14 cents per share (cps) has been declared. The dividend will be 90% franked and AMP’s shares will trade ex-dividend on March 1. Payment date is April 8
  • Underlying return on equity increased 0.5% to 13.2%

Amongst the key drivers of AMP’s improved results were the following divisional highlights:

  • Australian wealth management – recorded earnings growth of 10% helped by a 10% increase in assets under management
  • AMP Capital – achieved 20% growth in operating earnings on the back of an expanding global footprint that saw funds under management for international institutional clients rise by over $2 billion to $8.8 billion
  • New Zealand – grew operating earnings by 9% thanks to growth in margins and insurance experience

Pricing

AMP’s total dividend distributions for 2015 are 28 cps. With the share price at $5.18 this implies a yield of 5.4%.

Meanwhile, the underlying earnings per share for the year were 37.9 cps, which implies a price-to-earnings ratio of 13.7 times.

Management provided guidance for underlying cost growth of 3% and a compression of around 4.5% in average margins for wealth management due to the transition to MySuper.

Given the operating environment it would seem fair to assume that the outlook for growth in 2016 is somewhat muted making the consensus forecast for earnings per share in 2016 of 40.8 cps appear a reasonable estimate. (Source: Thomson Consensus Estimates).

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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