AUB Group says the business has started the new financial year with “strong momentum”, giving it the confidence to raise its 2020/21 earnings guidance.

Underlying net profit after tax for the year to June 30 2021 is now projected at $60-62 million, up from $58.5-61 million, the broking group told shareholders at this morning’s annual general meeting. The previous guidance was announced in August when AUB reported its 2019/20 financial results.

The new forecast represents growth of 12.3-16.1% from the $53.42 million in underlying net profit after tax the business reported in the last financial year.

AUB says macro conditions remain volatile and uncertain and that it is still early in the current financial year but believes the business will benefit from the hardening rate environment and other supportive factors.

“AUB Group’s strong momentum from [the last financial year] has continued into the first quarter of [2020/21],” CEO Mike Emmett said.

“A continuation of a firming premium rate cycle, additional cost reduction opportunities, the increased take up of our new technology platforms and enhanced insurer agreements will enable improved income in our operating entities.

“These factors combined with continued acquisition opportunities and our ability to gain market share by leveraging our more balanced portfolio of businesses create a platform to deliver consistently strong, underlying profit growth for the foreseeable future.”

He says AUB’s “resilient performance through the current challenging economic environment is testament to the fact that we are a fitter and more complete organisation than ever before and gives confidence that the group is well placed for continued growth in [2020/21] and future years”.

“In [this financial year] and beyond, we have significant opportunities to further leverage our scale and drive efficiencies,” he said.

The move by AUB to lift its guidance follows a similar action from rival Steadfast last month. Steadfast also reported it started the new financial year strongly, with the business continuing to enjoy hardening rates and premium growth.

Mr Emmett reiterated to shareholders that AUB does not regard health and rehabilitation services as a “core strategy” for the business in the medium term. AUB has already sold its interest in Allied Health on April 1 following a strategic review exercise.

AUB is “continuing to evaluate [its] strategic options” for Altius, its other rehabilitation and health business, Mr Emmett said.

The business has reportedly appointed PwC to assist with the potential sale of Altius, according to an article in the Australian Financial Review in September. AUB has so far declined to confirm or deny the AFR report.