Australia's Challenger flags 97 pct profit drop after challenging first half

(Adds fiscal year 2019 guidance, context)

Jan 23 (Reuters) - Investment manager Challenger Ltd said on Wednesday it expects its interim net profit to plummet 97 percent following a tumultuous first half marked by increased market volatility.

The company said it expects statutory net profit of A$6 million ($4.27 million) for the six months to Dec. 31, compared with A$195.4 million in the prior corresponding period.

The large drop is driven primarily by its annuity business' exposure to equity markets, Challenger said in a statement. The company expects its normalized net profit, which disregards extraneous items, to drop by roughly A$7.9 million for the six months.

The company also said it now expects normalized net profit before tax for fiscal 2019 in the range of A$545 million to A$565 million, compared with A$547.3 million in 2018. Challenger was initially targeting growth of about 8 percent to 12 percent.

Equities were battered by a slew of factors in 2018, ranging from trade tensions between the world's largest economies, as well as concerns over a slowdown in global economic growth.

The Australian benchmark index lost nearly 7 percent in 2018, its worst year since 2011.

Challenger will report its interim results on Feb. 12. ($1 = 1.4039 Australian dollars) (Reporting by Ambar Warrick in Bengaluru Editing by James Dalgleish and Lisa Shumaker)

First Published: 2019-01-23 00:41:33
Updated 2019-01-23 01:03:43

© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.