Old Mutual urged to leverage on synergies

15

OLD Mutual Zimbabwe (OMZ) has been urged to capitalise on synergies between its business units to lower fixed cost overheads and increase the cross-selling of products as a way of generating more revenue.
This was after the listed integrated financial service group had recorded a 36 percent increase in profit to $329,8 million in the financial year ending December 31, 2018 driven by growth in total revenue.
However, the group’s advisory arm said it was crucial for OMZ to re-organise itself in order to enhance efficiencies.
“Opportunities will continue to be identified where the group can help its customers achieve their long-term financial goals and preserve value for their customer,” Old Mutual Securities (OMSEC) said in an analysis of its holding company’s financial results.
The Zimbabwe Stock Exchange (ZSE)–listed diversified financial services group’s operating profit surged 23 percent from $64,5 million in 2017 to $79,2 million during the same period, driven by profit growth in the life, banking and asset management businesses indicating resilience of the core business operations.
OMSEC said the business’ priority should be to remain future fit and competitive.
“This will entail identifying synergies between the business units to lower fixed cost overheads whilst increasing the cross selling of products to clients acquired by the group,” the company said, and added that the group’s statement of financial position revealed resilience in the face of tough macro-economic conditions.
The biggest take away was the availability of liquid assets when matched against policy holder liabilities proving the company’s ability to honour policy holder liabilities in the face of high claims.
OMZ’ property portfolio increased rental income by 10,7 percent notwithstanding the sale of one of the group’s central business district properties. Total borrowings remain significantly low when compared to the total composition of assets in the group and these are related to intercompany group balances.
“The diversified income streams from the various businesses under the group have been pivotal in ensuring stability of the company’s statement of financial position,” OMSEC said.
OMZ’s shares on the local bourse traded just above $0,21 million in the current year and posted a negative year to date return of 35,4 percent but a positive year on year return of 56,1 percent.
“The removal of the indigenisation restriction in 2018 has improved the share’s liquidity and we suspect that post the closed period, additional shares are likely to trade going forward. The share’s return however still compares unfavourably with the ZSE benchmark industrial index’s negative return of 16,8 percent in the current year,” OMSEC said.

newsdesk@fingaz.co.zw