AMP shares hit record low

By KEVIN TAYLOR and AGENCIES

Shares in financial services giant AMP plunged to record lows in Australia and New Zealand yesterday after more bad news from its troubled British operations.

AMP, which has 97,000 shareholders and 384,000 customers in New Zealand, predicted a worse-than-expected annual net loss of A$900 million ($975.6 million) for the 2002 year.

Within 10 minutes of trading on the Australian Stock Exchange after the news broke, the group's shares had dived more than 6 per cent to A$10.56.

The stock closed yesterday down 89Ac, or 7.9 per cent, at A$10.37.

The share price also plunged on the New Zealand Stock Exchange, where small volumes are traded. The shares closed down 85c at $11.25.

AMP shares peaked in New Zealand at more than $27 in June 2001.

AMP cut thousands of jobs late last year, and its share price has already plunged after capital problems at its UK business, Pearl Assurance.

New Zealand interests have not been immune from restructuring, although job losses are said to be few.

In November, AMP announced it was pulling the plug on its AMP Banking operation four years after it crossed the Tasman, when it was just starting to make money.

AMP said it would sell its New Zealand property finance and mortgage books, worth $2.7 billion, and its deposit book, totalling $500 million.

Last week the Australian Financial Review reported that AMP had taken indicative offers for its New Zealand banking and property finance assets.

But the company refused to confirm the report, saying only that the sale process was continuing.

AMP said yesterday it had slashed its estimate of operating margins to come from its UK Financial Services division in 2002 by another £36 million ($106.38 million).

That meant AMP now expected to report a 2002 net operating profit of about A$500 million before write-downs, asset sales and restructuring.

Once those were factored in, AMP expects to report a total net loss of about A$900 million.

The company said late last year that it would post a loss of up to A$600 million for 2002, compared with its net profit of A$690 million in 2001.

Analysts said AMP's news came as a surprise, as many had thought the group had announced most of its unsettling news last month amid results of its huge restructuring, including cutting 2000 more jobs.

At the time, AMP chief executive Andrew Mohl lowered earnings forecasts for its British businesses from £118 million in 2001 to £112 million in calendar 2002 and to £104 million for 2003.

The group now expects its British operating margins to fall to £76 million in 2002 instead of the £112 million previously forecast.

Mohl said the UK results underlined the impact of depressed sharemarkets and the continued difficult operating environment.

However, he said AMP had more than A$7 billion ($7.58 billion) of its capital invested in the UK. It was committed to "extracting value from our mature business and selectively growing our contemporary business in the best interests of shareholders".

One Australian analyst, who asked not to be named, said the news indicated that AMP's profits could remain under pressure for years to come.

"It's materially bad what's come out this morning," he said.

"There's an element to this which is going to be a future drag on profits as well, so we are going to see an impact on the market's future (earnings) estimates, so there's a strong fundamental risk for the stock to come down even more."

The company said "year-end processes" were still in their early stages. All estimates remained subject to final actuarial and audit review and sign-off.

AMP plans to report its 2002 result on February 26.