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AUB lowers profit forecast in new guidance

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AUB Group has lowered its underlying net profit growth forecast for this financial year to 12-14% after withdrawing previous guidance at the end of March due to the uncertainty caused by the COVID-19 pandemic.

The group forecast growth of 16-18% in February, before the rapid spread of the virus triggered government-ordered lockdowns in March, and before AUB put on hold plans to fully acquire MGA Whittles.

“I’m pleased by the financial resilience of the business and the financial performance to date,” AUB CEO Mike Emmett said yesterday. “We’re accelerating progress with strategic initiatives and continuing to reduce costs, thereby improving the underlying performance of the group.”

AUB says it now has a greater level of insight into the impact of the pandemic on group performance and expects adjusted net profit of $52-$53 million, assuming no significant changes to the seasonally important June Australian broking renewal cycle.

The forecast reflects a “strong earnings performance” through April and May and is based on unaudited figures for the financial year through to May 31.

AUB at the start of the financial year forecast profit growth of 8-10%, then raised that to 16-18%, mostly reflecting the benefit of the proposed MGA acquisition and improvements in the underlying business.

In a third quarter update, the company highlighted premium rate increases of 6.3% in the quarter, compared with a year earlier, and greater use of premium funding by customers.

AUB has confirmed a deferred interim dividend of 14.5 cents per share will be paid on September 3.

The company will make an announcement on its final dividend when it delivers its full-year results on August 24.

AUB’s share price has rebounded after slumping during March, and the broker was last week included for the first time in the S&P/ASX All Australian 200 Index following a quarterly rebalancing.

The index differs from the S&P/ASX 200 by excluding foreign-domiciled securities that are listed on the exchange.