Tower back in the black

By LIAM DANN and AGENCIES

Tower has announced a profit of $20.5 million for the six months to the end of March - reversing a net loss of $154.4 million for the same period a year ago.

Since last year's disastrous first half result - when the company was hammered by one-off costs relating to a change in accounting methods and writedowns - Tower has gone through many changes.

It has had a tumultuous capital raising, culled several directors and senior management staff, cut expenses, sold a business, shut others and overhauled the structure of its divisions.

Chairman Olaf O'Duill said Tower was 15 months into a group-wide programme of change.

"Growth in profitability has been driven by a combination of continued operational improvements and a strengthened capital position supported by favourable investment markets," he said.

This result provided evidence of the steady progress the company was making, he said.

Management highlighted a turnaround in the group's Australian operations as a feature of yesterday's result.

Tower Australia, which competes with larger rivals such as AMP and the main banks, made a profit of $10.5 million against a slight loss in the previous year.

The company's Australian wealth management operation increased its earnings by 51 per cent to $7.7 million.

There had also been a significant reduction in one-off costs and restructuring costs as well as a reduction in debt, management said.

Group managing director Keith Taylor said the result was pleasing but much still had to be done before the group reached its potential.

"Over the next six months the focus will be on further improving operational performance and further building momentum in earnings growth," he said.

Group operating earnings grew to $14.6 million, compared to a net loss of $4.3 million in the same period last year.

Malcolm Davie of First NZ Capital said Tower had regained its momentum after a tough period.

"And there's cause for optimism that that process will continue," he said.

Earnings per share for the six months were 5c on the expanded capital following last year's capital raising.

No dividend was declared.

O'Duill said dividend payments would be examined at the annual result, but he declined to give any earnings guidance.

"We are still rebuilding our capital base and we're clearing out debt," he said.

Tower is New Zealand's third largest retail fund manager, the second largest health insurer and the fifth largest general insurer.

Most of Australian revenue comes from its life risk business.

Shares in Tower - 17 per cent owned by Sir Ron Brierley's corporate raider Guinness Peat Group - went up 13c to close at $1.62 yesterday.