AMP shares plunge amid shock UK earnings downgrade

By NZPA

Tuesday 21st January 2003

Shares in AMP Ltd plunged to record lows in early trade today after the financial services giant shocked investors with more bad news from its troubled British operations.

AMP slashed its estimate of operating margins to come from its UK Financial Services division in 2002 by another STG36 million ($NZ106.38 million) and forecast a total net loss for the group's 2002 result of $A900 million.

The group's shares dived by more than 6 percent to $A10.56 within the first 10 minutes of trading, and was still 5.5 percent or A62c lower at $A10.64 by 1027 AEDT (12.27pm NZT).

In New Zealand the shares were 75c down at $11.35 by 12.49pm.

Analysts said AMP's news came as a surprise, especially as many had thought the group had announced most of its unsettling news last month amid results of its massive restructure, including 2,000 more job cuts.

At the time, AMP's chief executive Andrew Mohl lowered earnings forecasts for its British businesses from STG118 million in 2001 to STG112 million in calendar 2002 and to STG104 million for 2003.

The group now expects its British operating margins to fall to STG76 million in 2002 instead of the STG112 million previously forecast.

One analyst, who asked not to be named, said the news indicated that AMP's profits could remain under pressure for years to come.

"It's materially bad what's come out this morning," he said.

"There's an element to this which is going to be a future drag on profits as well so we are going to see an impact on the market's future (earnings) estimates, so there's a strong fundamental risk for the stock to come down even more."

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