AMP Capital defies parent company profit rout

14 February 2019 - 12:00 am UTC

AMP Capital was one of the only saving graces for its disgraced parent company, which unveiled a 97% profit slump after a tumultuous year following a Royal Commission into financial services. 

 
AMP posted a 35% fall in full year underlying profit to AUD 680m (USD 481.8m) in the year to 31 December from AUD 1.04bn the previous year.
 
Chief financial officer Gordon Lefevre described AMP Capital and AMP Bank as bright spots in a year where AMP was “hit by a perfect storm”, at at an earnings briefing on Thursday (14 February).
 
AMP Capital defied the negative trajectory of the rest of the business, reporting a 7.1 per cent rise in operating earnings to AUD 167m for FY’18. Fee income rose (AUD 708m), while costs rose 10 per cent to AUD 453m. The fund manager had AUD 4.4bn of uncalled capital and AUD 1.6bn in earmarked for committed transactions. 
 
But the company was quick to deny reports of AMP Capital being spun out of the group. Chief executive Francesco Di Ferrari told reporters at the briefing that “the portfolio business we outlined today is the one we see going forward. [AMP Capital] remains part of the portfolio”. 
 
The division, which consists of property and infrastructure assets, continues to attract strong external flows internationally, Di Ferrari said with assets under management surging more than 20% from AUD 5bn to AUD 17.3bn in FY’18.
 
China Life AMP Asset Management, in which AMP Capital holds a 15 per cent stake in, boosted its assets by 10 per cent to over AUD 41bn in FY’18 and launched 17 new products including separate managed accounts, diversified, equity and bond funds. China Life Pension Company, of which AMP holds just under 20%, also saw assets swell by 35 per cent to AUD 149.1bn.
 
During the year, AMP Capital refinanced Leeds Bradford Airport and recently announced the USD 1.8bn second close of its Luxembourg-registered AMP Global Infrastructure Fund II (GIF II), as reported.
 
Locally, it netted the 40-year rights to manage and maintain two student accommodation halls at the University of Melbourne and is also thought to be chasing a stake in ANU Canberra student accommodation portfolio, which Infratil is selling. 
 
AMP Capital’s external net cash flows, although still buoyant, fell to AUD 4bn which reflects the strong global investor interest in its infrastructure capabilities, the company said. This followed a record year in FY’17, which saw record cash flows of AUD 5.4bn.
 
The investment division currently has 302 institutional clients globally, and plans to continue investment overseas, real assets plus equities.
 
Last month, AMP Capital launched a dedicated global direct investments team looking to tap LPs aiming to co-invest alongside AMP’s equity funds. Marsha Beck was appointed Managing Director Australia of AMP Capital in a newly created role.
 
Di Ferrari said AMP Capital is likely to see “significant further growth in the business and will continue to invest to unlock [growth]”.
 
Late last year, it emerged the troubled parent company would sell off its life insurance division AMP Life (wealth protection and mature businesses) to Resolution Life for AUD 3.45bn.
 
The Royal Commission linked AMP executives to a string of malpractices, including charging fees for no services. A boycott of wealth management products ensued, with customers pulling almost AUD 4bn of wealth from under its management.
 
Di Ferrari today acknowledged that the iconic Australian company is moving away from its core business as a life insurer and provider of financial services. 
 
He described it as a “significant shift but a necessary one given the volatility and capital intensity of the businesses.”
 
Superannuation contributions also fell although it managed to retain the majority of employer plans, according to its earnings statement. AMP Bank also defied the downward earnings trajectory, recording growth of almost 6 per cent in FY’18 to AUD 148m.
 
Company shares fell to AUD 2.28 – down 0.15% at lunchtime on Thursday.