Standard Life Plc, Scotland’s biggest life insurer, said first-half profit rose 10 percent, missing analysts’ estimates, as earnings from pensions slumped in the U.K. and Canada.
Operating profit for the six months to June 30 was 182 million pounds ($287.6 million), compared with 166 million pounds a year earlier, the Edinburgh-based company said today in a statement. That missed the 196 million-pound median estimate of four analysts surveyed by Bloomberg. The shares fell.
“There’s an element of profit-taking because the shares have had a strong run in the past month,” said Barrie Cornes, a London-based analyst at Panmure Gordon & Co. “There will be strong new business growth and net inflows later on, but there’s an element of building to take place and development costs to be spent in the meantime.” Cornes downgraded his rating on the stock to “hold” from “buy.”
Standard Life, which rose 20 percent from July 1 through yesterday, is seeking to earn fees for managing customers’ pensions as more Britons switch from final salary and government-sponsored plans. The insurer, the U.K.’s fifth-biggest asset manager, bought a majority holding in Aida Capital Ltd. in May to add hedge funds to its product range.
The stock dropped 9.3 pence, or 4.3 percent, to 207.1 pence at 9:04 a.m. in London trading, valuing the firm at about 4.7 billion pounds.
U.K. rivals Aviva Plc and Legal & General Group Plc last week posted higher profits and raised their first-half dividends as they cut commissions paid to salesmen and sold lower-cost products.
Standard Life raised its first-half dividend to 4.35 pence a share from 4.15 pence in 2009. That beat the analysts’ estimate of 4.3 pence a share. Net income was 182 million pounds, compared with a 20 million-pound loss a year earlier.
Profit before tax from the U.K. fell 5 percent to 76 million pounds in the period and earnings in Canada dropped 16 percent to 62 million pounds.
The insurer doubled investment spending to about 72 million pounds in the first half, “a large proportion of which was in the U.K.,” Finance Director Jackie Hunt said on a conference call with reporters. That hurt earnings in the firm’s home market, she said.
Asset Management Unit
Standard Life’s fund-management unit posted an 81 percent rise in profit to 49 million pounds. Assets under management climbed 3.1 percent to 143 billion pounds, driven by higher inflows into the fixed-income division and funds that bet on rising and falling stocks.
“As pressure comes on companies to reduce defined-benefit schemes, it’s inevitable that you’ll continue to see a reduction in defined-benefit institutional flows into equities,” said Keith Skeoch, chief executive officer of Standard Life Investments.
Skeoch said he’s sticking to his forecast at the beginning of the year that the FTSE 100 Index would reach 6,000 points by Dec. 31. The index was at 5325.32 points at 9:03 a.m. today.