- Firm hits operating cash target early
- £300 million of annual surplus cash
- Deleveraging top priority for now
Investors in Phoenix Group (PHNX) received a welcome lift in the value of their holdings after the insurer and pension provider revealed it had hit its cash generation target early and was raising its three-year profit targets.
The shares added 33p or 6% to a three-month high of 557p, their best one-day performance for some time.
RAISED THREE-YEAR TARGETS
For the 12 months to December 2024, the group posted operating cash generation of £1.4 billion, an increase of 22% on the previous period and two years ahead of schedule, driven by increased surplus from its growing businesses and management actions.
That figure more than covers the firm’s recurring uses, including the dividend, and will produce around £300 million of excess cash per year, leading the board to upgrade its forecasts for future organic growth.
Total cash generation was £1.78 billion, above the top end of the £1.4 billion to £1.5 billion range, so the board also increased its three-year target from £4.4 billion to £5.1 billion with excess cash of £1.1 billion to be allocated mainly to deleveraging the business.
That being said, the final dividend was raised by 2.6% to 27.35p per share and the group reaffirmed its intention to pay a ‘progressive and sustainable’ dividend going forward.
WHAT DID THE CEO SAY?
‘We made good progress in 2024 executing our 3-year strategy, delivering sustainable and profitable growth in both our Pensions and Savings and Retirement Solutions businesses, (which) has supported strong 2024 financial performance across our key metrics of cash, capital and earnings,’ commented chief executive Andy Briggs.
‘Our strong performance in 2024 and the operating momentum we have built will support us in delivering our growth strategy and have led us to upgrade our cash generation and adjusted operating profit targets through to 2026. Delivery will give us the financial flexibility to reduce our leverage, while also sustaining our progressive dividend for shareholders.’
Disclaimer: The author owns shares in Phoenix Group
