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Fair weather over the last six months has helped Tower New Zealand's turnaround stay on track with the company yesterday reporting a 28 per cent increase in half- year net profit from continuing operations.
The company's bottom line fell 91 per cent to $19.7 million, with last year's
figure boosted by a $199 million gain from the sale of its Australian operations.
However, stripping out one-offs, the net profit for the six months to March was $20.2 million.
Net profit from Tower's health and life insurance division rose 28 per cent to $15.1 million thanks to a positive claims record and a fall in expenses.
The bottom line for the general insurance business rose from $4 million to $7.7 million with both the local and Pacific Island divisions performing well.
"We have had a good season and we haven't had the storms and the issues that Australia has had," said group chief executive Rob Flannagan.
The investments business saw total income rise, however the net profit fell to $2.3 million from $3.6 million due to increased project expenses and compliance costs with KiwiSaver and the Portfolio Investment Entity (PIE) regime, together with lower investment returns from weak markets.
Flannagan said the investment business had incurred a number of additional expenses relating to KiwiSaver and the PIE regime. He said further additional costs were expected should the Government change this year, resulting in further "tinkering" with KiwiSaver.
Tower's KiwiSaver schemes have snared about 9 per cent of the market so far. "We certainly would like to be higher," said Flannagan, who expected the business to break even within two to three years.
Group revenue from ordinary activities rose 15 per cent to $204.9 million.
No interim dividend was declared. In November it announced its first dividend payout in five years and said it wanted to make regular payouts, depending on performance.
Diluted earnings per share rose to 10.59c from 8.33c and annualised return on equity improved from 14.4 per cent to 15.4 per cent.
Flannagan said the result reflected the solid progress since the de-merger of its Australian business.
Tower is the subject of a partial takeover bid from Guinness Peat Group which underwrote a $210 million capital raising for the pre-split five years ago after it was ravaged by a series of massive writedowns and lacklustre results. GPG wants to raise its stake from 19.7 per cent to 35 per cent, offering $2.30 a share.
Tower shares closed down 5c yesterday at $2.19.