Challenger revenue up despite slowdown
Challenger Internationalhas managed to secure record revenues of $351.3 million in the September quarter of this year, despite the uncertainty pervading world equity markets since the September 11 terrorist attacks in the US.
Challenger managing director Bill Ireland told shareholders at the group’s annual general meeting today the result, almost $30 million ahead of budget, had put the group on target for a solid full year profit result.
Ireland says Challenger has been shielded somewhat from much of the downturn in equity markets by its cash, fixed interest and property products, many of which had been considered as safe havens by investors after the attacks on the US.
The positive result was also boosted by strong annuity sales which reached $195 million for the three months to the end of September. Challenger’s property portfolio also increased by about $250 million to $2 billion over the three months.
"The quarter is excellent and we are heading towards a very good result for the full year," Ireland says. "We do believe annuity sales will continue on a strong base for the remainder of the year."
But Ireland says Challenger’s share price has been disappointing since September, when the group reported a net profit of $154.1 million for the year ended June 2001.
He says the group’s aim is to achieve a sustainable after tax profit of $200 million per annum within 3 years.
Challenger has also been forced to put off an advertising campaign for its newly launched global investment fund until March next year in response to the global uncertainty following the attacks in the US.
Ireland told shareholders the Global Choice fund was one of the few areas within Challenger to be negatively impacted by the global uncertainty.
The fund, officially launched in April of this year, gives investors access to 20 US mutual funds managed by five US based fund managers.
Ireland says the group’s major focus in the year ahead will be to forge new distribution alliances in an attempt to broaden the market for its products.
Last month, Challenger announced it was in discussions with Merrill Lynch to acquire the group’s private client division as part of its distribution plans, only to have negotiations collapse before a satisfactory conclusion could be reached.
At the time, Ireland indicated Challenger would pursue further alliances with financial planning groups in an attempt to fill the hole left in its distribution ambitions.
“Distribution is the most important and powerful component of our business,” Ireland says. “The more access points to the market we have, the more market flows that we will have.”
Ireland also announced today that the group’s UK operation would launch a new hybrid annuity product within the next week.
Ireland says the product will change the way individuals perceived retirement income in the UK.
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