Financial services giant Prudential rose in value on Wednesday as it released forecast-beating trading numbers and revealed details on its new growth strategy.
At £10.18, the Prudential share price was last 3.4% higher in midweek trading.
New business profit at The Pru jumped 36% between January and June to $1.5 billion, ahead of City estimates. Annual premium equivalent (APE) sales, meanwhile, improved 37% year on year to $3 billion thanks to the end of Covid-19 lockdowns.
In Hong Kong, new business profit soared 218% to $670 million. However, in China new business dropped 16% from the same 2022 period due to tough economic conditions.
Adjusted operating profit at group level climbed 6% in the first half, to $1.5 billion. This encouraged the company to lift the interim dividend 9% to 6.26 US cents per share.
Planned Changes
Looking ahead, The Pru announced details on its new growth programme that it says “will build a sustainable growth platform… through targeted investment in structural growth markets across Asia and Africa.”
Planned changes include streamlining its organisation model, and prioritising technology-powered distribution “with a focus on agency and bancassurance productivity and activation.”
The company hopes its strategy will see new business profit grow at a compound annual growth rate of between 15% and 20% through to 2027.
“The Next Chapter”
Chief executive Anil Wadhwani — who took up the role in February — said that “the interim results demonstrate the power of our multi-engine, multi-channel business model across Asia and Africa.”
He said that “the business performed strongly in the first half of 2023,” and added that “this sales momentum continues into the current third quarter.”
Concerning the company’s new growth plan, Wadhwani said that “we are excited to write the next chapter of growth at Prudential.”
“With a clear strategy, operational and capital allocation priorities, we are focused on delivering sustainable value for all our stakeholders: employees, customers, shareholders and our communities,” the new man added.
“Encouraging” Update
Matt Britzman, equity analyst at Hargreaves Lansdown, noted that “there might be trouble in China, but that’s not caused any major hiccups with Prudential’s performance.”
As for The Pru’s revamped growth plan, the analyst said that “nothing here looks like a major overhaul,” noting that “[an] increased focus on delivering tech distribution and more consistent client journeys across products and geographies all make sense.”
Mark Crouch, analyst at eToro, described the first-half update as “encouraging.” But he added that “there is some cause for concern in the nuance of this.”
He said that “China is showing visible signs of economic distress, and this is likely to spill out into neighbours as credit dries up and firms and households batten down the hatches.”
He added that “investors could be in for a bumpy ride in the next few months as external factors leave an ambitious growth plan hostage to fortune.”
Royston Wild owns shares in Prudential.
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