AMP reports negative first quarter cash flow

By Phil Boeyen, ShareChat Business News Editor

Tuesday 7th May 2002

First quarter cash flow at financial services giant AMP (NZSE: AMP) has dipped into the red, weighed down by factors such as difficult global financial markets.

The company reports that total net wealth management cash flows for the three months to the end of March were negative A$398 million compared with total net cash flows of A$8.5 billion in the first quarter last year.

AMP says product and distribution changes were also to blame, along with the maturation of a single A$4 billion short term institutional cash mandate.

"Inflows into AMP's high margin, contemporary retail products fell from A$5.9 billion in the first quarter of 2001 to A$4.5 billion in the first quarter of 2002," the company says.

"This slow down helped compress net contemporary retail cash flows to A$1.2 billion compared with A$2.3 billion in Q1 2001.

Lower margin institutional net cash flows also fell from A$5.8 billion last year to a negative A$1.5 billion, largely as a result of the maturation of a single A$4 billion fixed term, fixed fee cash mandate in the quarter.

CEO Paul Batchelor says the company expected 2002 to be another tough year for financial services companies.

"We are managing our business accordingly, not chasing unprofitable volume or market share to ensure we preserve the value of new business.

"In addition, in line with our strategy, we have deliberately withdrawn from a number of unprofitable and capital intensive product lines."

Looking forward Mr Batchelor says flat global equity markets are dampening investor confidence and adding to an already tough business environment.

"In these conditions, where there is real pressure on top line growth, we are concentrating on the things we can best control in the short term - particularly costs and capital management."

AMP says its objectives remain to manage its business tightly and focus on profitable new business growth.

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