The AMP Limited (ASX: AMP) share price is tumbling today, falling 10.4% in afternoon trade to $1.38 after the company released its FY20 results. Here are the key points from AMP’s results.
Outflow momentum impacts the bottom line
The company reported revenue for the full-year of $2.3 billion, down 12.6% largely due to net outflows amounting to $17 billion.
Overall assets under management (AUM) fell 6%, led by an 8% decrease in the Australian Wealth Division and a 7% decrease in AMP Capital.
Group underlying net profit after tax (NPAT) slid 33% to $295 million, with all business units recording double-digit decreases.
Management advised there would be no final dividend, after surprising shareholders with a special dividend of 10 cents in the first half.
Potential takeover bid withdrawn
In October, Ares Management Corporation announced an indicative, non-binding proposal of $1.85 per share.
After three months of due diligence, Ares advised AMP that it does not intend to proceed with the purchase. Ares will continue to engage with management regarding AMP Capital.
AMP management didn’t disclose if there were any other potential takeover candidates.
This is a setback for the company and shareholders, with the AMP share price rising over 20% on the initial announcement of Ares’ offer (see below).
AMP shart price chart
Completion of portfolio review
New Chair Debra Hazelton ordered a wide-sweeping portfolio review last year, which has concluded the business should continue with its three-year transformation strategy of cutting costs, simplifying the portfolio, and growing AUM.
Additionally, AMP is committed to keeping its Australian Wealth Management arm. The review effectively leaves AMP in the same position it was six months ago, battling to retain market share to technology disruptors Netwealth Group Ltd (ASX: NWL) and HUB24 Ltd (ASX: HUB).
Summary thoughts
I think the best summary of the state of AMP’s business is the change in NPAT across its four business units:
- Australian Wealth Management – 43.6% decrease year-on-year
- New Zealand Wealth Management – 18.2% decrease year-on-year
- AMP Bank – 15.6% decrease year-on-year
- AMP Capital – 31.9% decrease year-on-year
The business is clearly taking hits across all divisions, with seemingly little potential for improvement in the short-term.
Frustrating for shareholders, much of the management commentary centres upon “volatility in markets, economic downturns, and the impact of COVID-19”, rather than addressing the underperformance of its funds and loss of institutional mandates.
Without a clear takeover suitor and poor internal performance, I think there are better places to invest your capital.
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