STANDARD LIFE delivered a higher operating profit and cranked up its dividend yesterday, but investors were underwhelmed by weaker UK performance and shrinking margins.
The Scottish life and pensions group hailed “the progress we have made as a business” as David Nish announced his first interim results as chief executive. Strong sales in Canada and Asia helped push operating profits up 10 per cent to £182m on an International Financial Reporting Standards (IFRS) basis, with the post-tax figure also standing at £182m after a loss of £20m last year. Standard?Life also boosted its half-year payout 4.8 per cent to 4.35p.
But disappointed investors sold Standard Life paper, sending the stock down 2.4 per cent to 151.1p. Given a share price rally of almost a quarter over the past month some analysts said profit-taking was to be expected, but others said concerns were more deep-seated.
UK operating profits were down five per cent to £76m, partially depressed by an investment programme, while the margin slipped 30 basis points to 1.5 per cent.
Barrie Cornes at Panmure Gordon said: “What they’re doing in terms of investing all comes through in 12 to 18 months’ time. In the meantime I’m not convinced growth will be as stellar as it could be.”
Marcus Barnard at Oriel Securities said it was difficult to gauge the outlook for the company as it was still in transition from mutual to large-scale seller of savings products. “You can give them the benefit of the doubt but it’s difficult to get any great deal of comfort from these numbers.”
Nish insisted the group was more focused after the sale of its banking and healthcare units and said the board was unfazed by the prospect of a weak economy. “In a lower-growth environment you often see the savings rate go up because individuals still have money,” he told City A.M.