Turbulent markets buffet AMP

By Phil Boeyen, ShareChat Business News Editor

Monday 5th November 2001

AMP's (NZSE: AMP) net cashflow has been severely dented in the third quarter although the company says gross cashflow remains strong.

In the three months to the end of September the company recorded net cashflows of A$3.158 billion, less than half the A$7.818 billion for the same period last year. Gross cashflow was A$14.1 billion, up from A$12.52 billion previously.

AMP chief, Paul Batchelor, says global economic uncertainty is having a significant impact on wealth management companies around the world.

"However, we are successfully managing our business to meet current conditions and preserve current and future profitability.

"Importantly, gross inflows for the quarter remained strong, up 13% to A$14.1 billion, which is a pleasing result in the current climate. Outflows, however, increased in the UK and Europe, which was not surprising given the volatility in those markets."

One of the hardest hit divisions, Henderson Global Investors, saw its retail net cashflow fall from $2.073 billion in the third quarter last year to $415 million this year as a result of weak equity markets.

"There is no doubt that market conditions remain difficult in many parts of the world. We are continuing to manage the business tightly to meet these conditions and to protect our profitability, and we remain confident of our prospects," says Mr Batchelor.

Despite the big drop in net cashflow the company is stressing to investors that the figures are not sales figures and are not representative of total group revenue.

"Cash flows are one of the long-term drivers of value, along with product profitability, cost and capital efficiency. AMP also derives income and profitability from its substantial inforce book and its assets under management, which have remained relatively steady in the face of falling equity markets."

Mr Batchelor says at current market levels the company is still expecting to deliver its shareholders double digit growth in core recurring operating margins for the full 2001 year.

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