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Johannesburg – Sanlam’s interim results show the company’s growth comes with much more diversification and much more resilience, according to group CEO Johan van Zyl.
Van Zyl said the challenging operating conditions in SA included weak economic growth, consumers who are increasingly under pressure and the impact of prolonged industrial action.
“The SA economy is not going back to levels we saw eight to ten years ago. We are plodding along at 2% or a bit below and that is not great, especially if one talks to industrialists from the US and Europe,” Van Zyl said at an interim results presentation in Johannesburg on Thursday.
Sanlam [JSE:SLM] posted an expected 28% jump in half-year earnings on Thursday. It said diluted headline earnings per share totalled 220.2 cents in the six months to end-June, from 171.4c a year ago.
Sanlam had flagged earnings would be up to 30% higher, while new business volumes would climb 7% to R88.7bn.
READ: Sanlam earnings jump 28%
Overall the market had a positive effect on Sanlam’s interim results, he said, and added that the weakening of the rand helped, especially in relation to interim results from the company’s UK exposure.
Results in Botswana were boosted by the consumer base being on the up.
“The economy there is well managed and the country is doing well,” said Van Zyl in a conference call.
He said he is also happy with the way the company’s Indian and Malaysian exposure contributed and he foresees opportunities for even further growth prospective there.
“We will continue to focus on returns as a major measurement of our success. We shall focus on the growth component in SA as there are still positive growth pockets where there is money to be made,” he said.
“We are also trying to get more into high growth markets, for instance in South East Asia, the rest of Africa and the UK.”
Between 75% and 80% of Sanlam’s business is still in SA, where the company will be looking at greater efficiency and to get returns up.
“By putting all of that together you get a blended type of double-digit real growth in the future,” he said.
ALSO watch Johan van Zyl's video interview with Fin24:
Among the highlights of the interim results he pointed out the increase in net operating profit per share, the personal finance business doing well and “Santam coming back to the party”.
“We are still very happy with the overall picture and have a much better distribution among our various units. We are much more diversified than we used to be and that is why we can also stomach a bit of the difficulty in the economy,” said Van Zyl.
“We are driving efficiency hard as our core competency and we have quite a few plans to manage costs.”
He said regarding the emerging market space Sanlam will work on putting some “missing blocks in place” by means of partnerships.
“The next six months will be tough, with pressure likely especially on the retail side and some markets’ volatility, but we are on track,” he said.
“Most of our best growth will come from outside SA and that will counter the impact of consumer pressure in SA.”
Sanlam shares closed slightly down (-0.04%) on R68.26, compared with a 0.56% rise in the JSE All-share index to 52 081.22
points.
- Fin24
