Sanlam Ltd., the largest South Africa-based insurer, said it will struggle to maintain profit growth in the second half.
“The operating environment in the second half of the year is expected to remain difficult with weak economic growth in the group’s core markets and investment-market volatility,” Sanlam said today in a statement. “These conditions are likely to impact the group’s ability to maintain the strong growth achieved in the key performance metrics.”
Net operating profit rose 24 percent to 2.4 billion rand ($233 million), while earnings excluding one-time items and fund transfers jumped 36 percent to 3.44 billion rand in the six months through June, the Cape Town-based company said.
Sanlam’s shares, which fell earlier in the day, were fourth of the five stocks on the FTSE/JSE Africa Life Assurance Index today. The stock gained 0.4 percent to 46.95 rand by the close in Johannesburg.
“The operating profit component of the earnings did not increase at the same rate as headline earnings,” Risto Ketola, an analyst at SBG Securities, said in an e-mailed response to questions today. “This means that a greater portion of headline earnings came from investment return-related items which do not have the same permanence as operating profits.”
Sanlam operates in Africa, Europe, the U.K., U.S., India and Malaysia. It paid a special dividend earlier this year, boosted its stake in an Indian financial-services group and bought 49 percent of Malaysia’s Pacific & Orient Insurance Co. While South Africa contributes most of the company’s profit, Sanlam said it can only pursue organic growth in the country.