The troubled financial services group has downgraded its profit expectations and drastically reduced its dividend payout for 2018.
In a trading update on Friday, AMP provided an update on expected earnings and final dividend for the year ended 31 December 2018 ahead of its FY18 results announcement, which will be announced on 14 February.
While its FY 18 results are still being finalised and subject to audit review, AMP expects to report an underlying profit of around A$680 million, down 34.6 per cent on the $1.04 billion the group made in FY17.
AMP anticipates profit attributable to shareholders of approximately $30 million in FY18. The company pointed to its poor second half performance, the related capital impacts and the uncertainties in the operating environment before warning that a final dividend of 4 cents per share.
“Total profit attributable to shareholders in 2H18 has been impacted by a range of previously advised items reported below underlying profit,” the group said.
“These include the costs arising from the royal commission response, portfolio review, increased investment in risk, governance and controls, and advice remediation.
Total in 2H18 are expected to be approximately $220 million, with around $325 million from AMP’s Australian wealth management business, AMP Capital, AMP Bank and New Zealand wealth management and advice arms. A net operating loss of around $105 million is expected from the sale of its wealth protection business to Resolution Life.
Looking ahead, the group anticipates more trouble ahead in FY19 with forecasted costs already totalling $160 million.
“In 2019, the earnings of the retained businesses are expected to be impacted by external market conditions, the regulatory environment, implications of the future strategy and a number of previously advised factors,” AMP said.
The biggest costs is expected to come from unwinding the internal distribution arrangements and adjustments for tax and products transferring on sale to Resolution Life with an annual impact of approximately $85 million.
AMP also expects full year impacts of the MySuper pricing changes to Australian wealth management of $35 million and stranded group office costs of approximately $40 million.