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


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