Colonial's rapid integration pays off
Colonial’s rapid integration with its acquired businesses is paying off in bottom line results, with the group reporting a 49 per cent jump in net profit to $455 million for 1999.
Colonial’s rapid integration with its acquired businesses is paying off in bottom line results, with the group reporting a 49 per cent jump in net profit to $455 million for 1999.
Colonial chief executive Peter Smedley attributes the profit growth spurt to the successful integration of the Prudential and Legal & General businesses acquired in 1998. The integration has already produced annualised cost savings of $162 million, ahead of the $150 million initially expected.
Colonial UK was a lowlight of the results, with profits down from $68 million to $57 million. Smedley says the fall in UK profit is largely due to lower investment returns from fixed interest securities following the buoyant investment market of 1998.
He says the company will continue to focus on lower cost distribution entries into the UK funds management business, following the acquisition of Edinburgh-based fund manager Stewart Ivory last month.
"We are looking at our options in the UK. We have seen very clear opportunities to build a successful low-cost funds management business, we have not found a solu-tion to taking forward a low-cost life insurance business," he said.
Colonial International Financial Services managing director Rob Garnsworthy says the group is also focusing on its e-commerce strategy, with a full financial services website to be rolled out later this year.
"We've tried to draw together the resources of Australian Financial Resources and First State to pull together what we think will be a very compelling offer, and it will be focused as an allfinanz offer," he says.
Garnsworthy says the group is investigating alliances to facilitate its e-commerce goals, particularly in areas in which Colonial lacks market presence.
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