Admiral delivers solid 'comfort food' full-year results

5th Mar 2014 08:49

- Revenue down eight per cent on UK auto market weakness- Pre-tax profit up seven per cent- UK auto a concern but 'will hurt our competitors more'Investors cheered an in-line set of full-year results from insurance giant Admiral on Wednesday, as the group hailed the 'year of the baked potato' - what it described as a 'comfort food' set of results. Group profit before tax was up 7% at £370m (2012: £345m) on turnover of £2.03bn, which was down 8% from £2.22bn in 2012. Earnings per share were up 10% at 104.6p from 95.1p a year earlier. A final dividend payment of 50.6p per share brought the total pay out to 99.5p, up 10% on 2012. The results were dominated by the performance of UK Car Insurance, which accounts for 84% of turnover and 82% of customers. The market has suffered a price drop of around 25% during the past two years, paralleled by a drop in claims costs. As it focused on lower premium, lower risk business, UK Car Insurance contributed to a reduction in UK turnover of 12% to £1,698.9m.The group admitted if the market doesn't turn soon, the situation "might" hurt Admiral, however it said this would "hurt our competitors earlier and harder, as they are largely unable to match our combined ratio". Notably, the International Car Insurance business narrowed losses, down from £24.5m to £22.1m year-on-year, as revenue climbed from £162.9m to £187.8m and total premiums written rose from £148.5m to £168.3m. This marked the first reduction in losses since the company launched Spanish unit Balumba in 2006, its debut international firm, although the loss was still higher than the £19m predicted by Numis Securities.Looking forward, the group said its medium-term profitability would be greatly influenced by its response to the eventual turn in the UK cycle. In the longer-term the group is looking to the progress made by its non-UK operations and UK Household divisions. Henry Engelhardt, Group Chief Executive Officer, said: "2013 was the year of the baked potato. It was a good, solid year, something on the plate that is appreciated but doesn't really grab the spotlight. This is a comfort food set of results."Why the baked potato? Because the year was solid, but not flashy. We made more money than ever before, we grew customer numbers a little bit, we launched one new overseas business, but there was no growth surge, there were no claims shocks; we just went about our business." Investors welcomed the results as shares rose 4.79% to 1,487p by 08:30 following their announcement. NR