Annuities and retirement specialist Challenger Ltd (ASX: CGF) released its 2018 financial results today showing an 11% increase in revenue and a final dividend of 18 cents per share.
Challenger, which also has a funds management business, reported a 19% fall in statutory net profit to $322 million. However, on an underlying basis, Challenger said it actually produced a record profit result — up 6% to $406 million.
Challenger announced it will pay a final dividend of 18 cents per share, fully franked. That takes the full year dividends to 35.5 cents per share, up from 34.5 cents per share last year.
Analysts surveyed by Bloomberg had been expecting an underlying profit result of $401.7 million and full-year dividends of 35.5 cents per share. Therefore, it appears Challenger’s 2018 result was broadly in-line with analysts’ forecasts.
Challenger’s CEO Brian Benari appeared positive about the year and outlook, saying, “Challenger has great business momentum and is well positioned for the next phase of growth.”
In addition to growth in its annuities products, which are designed to produce an income stream for retirees, Benari said its funds management business, Fidante Partners, is one of the fastest growing in Australia.
Benari cited tailwinds in the Superannuation sector as a key driver of growth going forward.
“…providing options for Australia’s retirees to convert their superannuation into income that lasts for life has become an increasing focus for industry and government,” he said. Adding, “As a leader in retirement incomes, Challenger is ideally positioned as lifetime products become an increasingly mainstream option in retirement.”
Looking towards the future, Challenger said it is targeting normalised or underlying profit growth of between 8% and 12% in its 2019 financial year. It plans to return between 45% and 50% of normalised profit as dividends back to shareholders.
Introducing The Australian Investors Podcast
Join The Rask Group’s founder, Owen Raszkiewicz, as he profiles Australia’s best investors, founders, authors and financial thinkers. Download it free on iTunes, Castbox, SoundCloud or wherever you choose to listen.
