South African insurer Old Mutual on Thursday said it expects first-half profit to fall by more than 20% but will cut costs to contend with the impact of the coronavirus pandemic.
The 175-year-old company said the pandemic and related lockdowns and restrictions in most of its markets had hurt sales and it expects recovery to be slow.
“To mitigate the expected pressure on earnings, we have implemented a series of management actions focusing on reducing expenses in 2020,” it said, adding that internal stress-testing had left it comfortable with capital and liquidity levels.
“We are also working on a number of medium-term initiatives to capitalise on the growth opportunities the pandemic presents.”
These additional measures will be communicated to the market in due course, it said.
Old Mutual has spent the past few years breaking up its international conglomerate structure to become a standalone African financial services group listed in Johannesburg, but efforts have been hindered by various crises.
The abrupt sacking of CEO Peter Moyo last year created a long-running scandal and court battle that knocked the insurer’s reputation and share price. That has left a temporary CEO, Iain Williamson, to lead the company through a global pandemic that has further dented performance.
Headline earnings per share – the main profit measure in South Africa – for the six months to June 30 is likely to be down more than 20% year on year, the company said, after a 33% drop in operating profit in the first quarter.
