Profitable AMP gives back $1b

Financial services company AMP yesterday celebrated a huge turnaround in fortunes with plans for a capital return worth more than $1 billion.

After a series of heavy losses, the company is back in the black with an A$934 million ($1.02 billion) profit for the year to December 31.

Last year, it lost A$5.5 billion - the second largest loss in Australian corporate history.

AMP will give A$750 million to shareholders - a return of A40c a share. It also plans to use A$256 million to pay off debt.

About $21 million will go to 88,000 New Zealand shareholders.

The company said it planned to hand back more money next year.

AMP is listed on the ASX and NZX.

It has a New Zealand division, AMP Financial Services, which yesterday also reported a strong profit improvement.

In Australia, the big jump in profit was mainly due to the booming sharemarket, which lifted AMP's investment income by 129 per cent to A$503 million for the year.

AMP chief executive Andrew Mohl said investment performance was helped by 86 per cent of Australian funds under management meeting or exceeding their benchmarks.

AMP made a disastrous start to the millennium, losing billions of dollars of shareholder wealth in an ill-fated expansion into Britain.

Its share price fell from almost $23 in 2001 to $4 in 2003.

Last year's A$5.5 billion loss was the result of writedowns from selling its ailing British operations.

Mohl has slashed debt and cut jobs since taking over the top job in 2003.

Management on both sides of the Tasman was keen to portray yesterday's result as the start of a new era for AMP.

New Zealand acting managing director Stephen White said morale in the company was good after a year of restructuring.

Local profits were up 8.8 per cent to $60.3 million.

The strong economy had helped, but the improved local profit was largely due to internal changes in the way the business was run.

"There has been a big degree of disruption in the business, so to finish the year with the results we have is pleasing," White said.

He said many of the benefits of the restructuring were still to flow through so it was expected that profits for this year would be better again.

The company was gaining market share in the insurance industry, and was improving customer retention rates.

AMP Financial Services is strongest in life insurance and corporate superannuation, where it has about 25 per cent of the market.

The AMP group result topped analysts' expectations and prompted Moody's Investors Service to revise its outlook for AMP's ratings from stable to positive.

But some analysts are unimpressed.

"They've turned the business around, but that's already been factored into the stock," said Lucinda Chan, head of Asian business at Macquarie Equities.

"Growth in new businesses was disappointing."

AMP shares closed unchanged at $8.20 in New Zealand and rose 3Ac to close at A$7.51 in Australia.

Big return

AMP will return A$750 million to shareholders - 40Ac a share.

That translates to about $21 million for New Zealand shareholders.

The company yesterday posted a profit of A$934 million for last year, compared with a loss of A$5.5 billion in 2003.