Insurance and investment group MMI has warned shareholders that its turnaround strategy is yet to translate into an improved financial performance.
Headline earnings per share for the year to end-June are expected to drop by between 15% and 25%, the group said on Friday.
Increased investment in client activities, higher technology spending and the persistent weakness of Metropolitan Retail weighed on results, the company said in a statement.
The group’s share of losses in new ventures, including in India, also increased. This was, however, in line with its business plans.
The group has delivered disappointing returns to shareholders in recent years, with its largest business units bleeding market share.
In its interim results in March, the group announced a R2bn share buyback in lieu of a dividend, a move analysts said at the time reflected the discount between its share price and its embedded value per share of about R27.
"We have reset the business to provide a strong foundation for improved performance and future growth," the group said on Friday. "We are confident that these changes will create value for shareholders in due course."
The company’s preferred measure of performance, diluted core headline earnings per share, was expected to fall by between 5% and 15% from the year-earlier period’s R2 per share.
Headline earnings per share were expected to fall to between 84c and 94c, or a decrease of between 15% and 25%.
Headline earnings were negatively affected by significant basis changes in Momentum Retail and Metropolitan Retail, and weak investment markets in 2017 resulting in a lower starting asset base for the current year, the trading update said.
At 10.25am MMI’s share price was flat at R16.59, having fallen 20.43% so far in 2018. This compares with a fall of 3.98% in the JSE’s life insurance index so far this year.
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