Momentum’s bet on itself pays off

Momentum has reaped the rewards of its three-year Reinvent and Grow strategy in the current financial year, with the company’s profit and earnings per share surging by around 30%.

The company released its financial results for the year ended 30 June 2024 on Friday, revealing strong growth across most of its business units. 

CEO Jeanette Marais said these results are a reflection of the strong progress made in the past three years under the company’s Reinvent and Grow strategy. 

This strategy was based on the decision from Momentum to focus internally on some of its business units that had come under pressure in the prior years. 

While some of the ambitious goals of the strategy were missed, the strategy had tangible benefits for the company. 

Momentum’s earnings per share surged by 29% in the past financial year to 282.9 cents per share, while operating profit grew 31% to R3.6 billion. 

“This was the outcome of positive contributions from most business units, including a recovery in Momentum Insure and Metropolitan’s earnings,” CEO Marais said. 

Solid life annuity profits from Momentum Investments, as well as strong underwriting experience in Momentum Corporate and Guardrisk, also contributed to the overall performance. 

The company’’s new business sales as measured by the present value of new business premiums increased by 19% to R82.1 billion. 

Businesses that contributed significantly to the increase in sales volumes were Momentum Corporate, which increased sales by 47%, Momentum Investments by 19% and Momentum Retail by 11%.

Many of the business units benefited from higher investment income from the assets in the portfolios backing policyholder liabilities and the elevated interest rate environment. 

However, Momentum’s value of new business (VNB) marginally declined by 2% to R589 million. 

“Even though the VNB improved significantly in the second half of the year, our new business margins are not yet where they should be,” Risto Ketola, Group Finance Director, said. 

“Management will continue to focus on increasing sales volumes, improving new business pricing and the sales mix, and reducing acquisition costs. Each business unit has clear plans in place to address the VNB.”

Overall, the company’s strong cash generation enabled it to announce a further R1 billion for its share buyback programme and increase its dividend by 4% to 125 cents per share.

Marais remains concerned about Mometum’s operating environment given the subdued economic growth, despite some encouraging signs of improvement that recently became visible in the South African economy. 

Inflation is expected to ease, the latest interest rate cut will start to bring financial relief to clients, and the absence of load-shedding should all gradually improve confidence levels, she said. 

The company’s new Impact strategy will run for the next three years until F2027. 

“For the next three years, we will focus strongly on excelling at advice, building and protecting our clients’ financial dreams through simplified products and service, technology enablement and disciplined capital management,” Marais said.