Weaker transtasman earnings cut Axa profits

SYDNEY- AXA Asia Pacific Holdings, the target of two competing takeover offers, says full-year operating earnings fell slightly last year, mainly because of a weaker performance in Australia and New Zealand.

Operating earnings for the year, before auditing and board consideration, were A$550 million ($695 million), compared with the A$555.6 million in 2008, Melbourne-based AXA APH said yesterday.

The wealth manager expects profit after tax and non-recurring items to be about A$675 million, compared with a loss of A$278.7 million in 2008.

AXA APH's operating earnings grew in Hong Kong and Southeast Asia. But earnings declined in Australia and New Zealand as average funds under management were about 25 per cent lower than in 2008, although earnings did improve in the second half.

AXA APH chief executive Andrew Penn said "I am pleased with our strong performance, particularly in the second half of 2009.

"We have responded well to the impacts of the global financial crisis and the earnings of all of our businesses have accelerated since the first half of 2009."

The earnings update comes ahead of February 6, when an exclusivity agreement between AMP and France's AXA SA, which made a joint bid for AXA APH last year, ends.

In December, National Australia Bank (NAB) made a surprise A$13.3 billion takeover bid for AXA APH, with the aim of trumping the earlier proposal from AMP and AXA SA, the majority owner of the target.

AMP and AXA SA made a combined proposal, where AMP would buy AXA APH, then on-sell the Asian assets to AXA SA, while keeping the Australian and New Zealand assets.

The bid failed to win over independent directors, something NAB succeeded in doing by offering an all-cash alternative.

AXA APH's net profit figure benefited from investment earnings of about A$185 million as equity markets staged a huge recovery in 2009.

Investment performance was a negative A$537.7 million in 2008 as equities slumped during the global financial crisis.

The company also benefited from non-recurring items by A$57 million.

Shares in AXA APH were steady at A$6.60 yesterday.

NAB's all-cash offer values AXA APH at A$6.43 a share. AMP and AXA SA's increased offer on December 14, which they said was their last, values the target at A$6.44, given AMP's share price of A$6.56.

- AAP