Investec Says Weaker South African Currency May Crimp Earnings
Investec Plc (INVP), which owns a bank and money manager in South Africa and the U.K., said full-year profit may be crimped after the rand slumped almost 11 percent against the pound over the past four months.
“Assuming all things being equal and that profits don’t grow in the second half versus the first half, then yes, the weakening rand will impact results further,” Ursula Nobrega, head of investor relations at Investec, said in an e-mailed response to questions on Jan. 29.
Investec reported a 1.6 percent drop in net income to 164.3 million pounds ($268 million) in the six months through September after a decline in the South African currency cut the value of its rand earnings. Southern Africa accounted for almost 70 percent of first-half operating profit. The rand has since dropped 10 percent against the dollar, making it the worst performer of 16 major currencies tracked by Bloomberg.
“We do not hedge our profits” for currency risk, Nobrega said. “We are not in the business of guessing where the rand may move to.”
Investec has declined 12 percent in London trading this year, cutting the value of the company to 3.43 billion pounds. The six-member FTSE 350 Banks Index fell 4.2 percent in that period.
To contact the reporter on this story: Renee Bonorchis in Johannesburg at email@example.com
To contact the editor responsible for this story: Dale Crofts at firstname.lastname@example.org