NZ not so rewarding for AMP

By PAULA OLIVER

Challenging conditions have cut profits at AMP's New Zealand arm.

The local operation, which was a steady performer during its global parent's woes last year, yesterday reported a half-year profit of $23.8 million.

That is down almost 20 per cent on the same period last year.

AMP's general manager of finance, Stewart McRobie, said the fall was partly because of one-off gains in the first half of last year.

"This 2004 result is a more truly representative number," McRobie said.

Reporting its half-year result in Australia yesterday, the parent company, AMP Ltd, described conditions in New Zealand as "challenging".

Operating margins here were down about 25 per cent on the previous half and net cashflows were negative but slightly improved.

Some encouragement for AMP's local arm did, however, come from flows into retail managed funds and corporate superannuation business.

They saw a positive cash flow of $10 million in the half year. AMP was quick to point out that its figures bucked the trend in the wider retail managed funds industry, where net cash outflows are more typical.

McRobie said the improvements came partly from new corporate superannuation business. The new state sector retirement saving scheme, for which AMP is a provider, would eventually push that along further.

McRobie said the "challenging" conditions referred to by AMP's Australian arm probably related to the environment the company operated in here, compared with across the Tasman.

"There isn't the same regulated savings regime. So the normal cash inflows you would take from the Australian environment don't flow on to New Zealand."

AMP's New Zealand arm poured considerable time and resources into altering its distribution network during the half year, changing the way advisers are paid. McRobie said the advisers' association had been involved in the introduction of the changes, which were focused on increasing productivity.

A more structured advice process was also coming, and a new series of savings and investment products would be launched later this year.

AMP's Wellington presence has shrunk, with 48 sales and support roles moving to Auckland.

Stephen White, interim managing director of the New Zealand arm, said: "There's more focus in Auckland than we've had in the past. This is clearly where the population growth is occurring. We've been under-represented here in the past and we want to build our Auckland business."

Some of AMP's team have not been keen to move. Former managing director Ross Kent departed after deciding he did not want to relocate. He left last Friday for a new job at Alliance Capital New Zealand.

Staff numbers at AMP's New Zealand business fell from 388 to 343 in the half year, largely because of two telephone support centres being merged.

Asked if staff numbers would keep falling, McRobie said they had probably stabilised and would grow again as the business grew.

He said the second half of the year had traditionally been a better one for AMP, and he expected insurance sales to lift through the coming six months, and continuing growth in investment and corporate superannuation products.