AMP aiming to lift margins by 10 percent


Batchelor sees AMP hitting its growth targets for 2002

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Australia's largest life insurer and funds manager AMP Ltd says it expects to meet its long-term goal of 10 percent-plus growth in its core operating margins this year.

Chief executive officer Paul Batchelor said Thursday that tough market conditions were continuing to have an impact on AMP, which in February reported a 40 percent drop in 2001 net profit to about $365 million (Aust.$690 million).

He said these conditions meant AMP would likely see growth of about 5 percent in its core margins for the six months to June 30, compared with the same period last year.

But cost-cutting and an assumed improvement in financial markets over the rest of the year would lift growth in recurring operating margins to 10 percent-plus for the full 2002 year.

"Even if markets end the year at current levels, we would expect to report a net profit for the full year well above 2001 figures," Batchelor said.

Most assets in U.K., Europe

AMP operates in 16 markets, with most of its activity in Australia, New Zealand and the U.K.

About a quarter of its assets under management are in Australia and New Zealand, with about 73 percent in the U.K./Europe and 2 percent in North America.

Batchelor said AMP was taking a number of cost initiatives, including a "more aggressive" cost-to-income target for its U.K. retail business.

AMP also announced it would buy back up to $400 million of its shares between May and December this year.

AMP shares closed 3.21 percent higher Thursday at A$17.37, up 54 cents.

But the company's share price has languished in recent months, trading occasionally under A$17 and well down from its one-year high of A$22, recorded in June 2001.