Suncorp Group Limited (ASX: SUN) - Share price moves up with annual result for 2018

A leading financial service provider, Suncorp group (ASX: SUN) today hosted the results announcement for financial year ending 30 June 2018. The company reported a 34% uplift in Net Profit After Tax on the first half, contributing to full year NPAT of $1,059 million, down by 1.5% from $1,075 million in FY 17. This reflects the upfront accelerated investment of $146 million in the marketplace along with the four-fold increase in regulatory costs to $54 million.

However, Cash earnings were down by 4.1% to $1,098 million from $1,145 million in FY17, as the first year of Business Improvement Program (BIP) reported a net benefit of $40 million which is ahead of company’s target by $30 million.

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The group announced FY18 final dividend of $0.40 per share and special dividend of $0.08 a share in addition to $0.33 per share of interim dividend, already been paid on 5 April 2018. The record dates for determining entitlements to the SUN 2018 final and special dividends, franked to 100%, is 16 August 2018, which is payable on 19 September 2018. The group’s dividend payout ratio increased from 81.9% in FY17 to 95.2% in fiscal year 2018.

Group’s underlying Insurance trading ratio was down by 0.9% to 10.6% in FY18 as compared to 11.5% in the previous corresponding year. But the group recorded 3% uplift in products per customers and 1.7% uplift in retention.

As part of Suncorp Group’s FY18 Results, Suncorp also announced that it has entered into a non-binding Heads of Agreement to sell its Australian life insurance business to TAL Dai-ichi Life Australia Pty Ltd for approximately $725 million. The legally binding sale documentation is expected to be executed by the end of this month. The above transaction which can potentially be accretive to Cash Return on Equity is scheduled for completion by 31 December 2018.

Michael Cameron led company, Suncorp also confirmed its target of a Cash Return on Equity of 10% for FY19, excluding the positive impact of the Australian life insurance business divestment. It also expects to report strong growth in FY19 driven by top line growth of 3-5%, maintaining an expense base (ex FSL8) of $2.7bn and driving further efficiencies in its claims handling costs through BIP initiatives. SUN stock moved up by 5.737% to $15.850, before market close, as group declared its results for FY18 on August 09, 2018.

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