Old Mutual Operational Performance Hurt by South African Economy

(Bloomberg) --

Old Mutual Ltd., the South African insurer locked in a prolonged spat with its fired chief executive officer, said earnings from its operations probably fell as much as 5%, weighed down by a stuttering local economy.

South Africa's economy expanded at the slowest pace in a decade in 2019 as business and consumer confidence plunged amid a shortage of electricity and shrinking disposable incomes. Old Mutual is also having to contend with hyperinflation and the worst economic crisis in Zimbabwe in a decade. It's been in and out of court since firing CEO Peter Moyo in June last year.

Read more: Old Mutual Feud With Fired CEO Risks Thwarting Growth Ambitions

Adjusted earnings per share before one-time items will probably increase 4%-9% for the 12 months through December, buoyed by higher returns on investments, Old Mutual said in a statement on Thursday. The shares dropped 0.7% by 10:34 a.m. in Johannesburg, reversing an earlier gain of as much as 2.8%.

Cross-town Johannesburg-based rival Liberty Group Holdings Ltd. is focusing on taking market share in order to grow earnings, CEO David Munro said on Feb. 27. Liberty's adjusted EPS rose 44% after South African equities gained 8.2% in 2019.

To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Chris Kay

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