Hillie Meyer. Picture: FREDDY MAVUNDA
Hillie Meyer. Picture: FREDDY MAVUNDA

Insurance and investment group MMI has warned shareholders that its turnaround strategy is yet to translate into an improved financial performance, but analysts are upbeat.

Increased investment in client activities, higher technology spending and the persistent weakness of Metropolitan Retail weighed on results in the year to end-June, with the group on track to report its third consecutive year of earnings declines.

MMI, however, appeared to be quite far down the track in improving capital discipline and focusing on core operations in SA, and results appeared encouraging even if not yet reflected in the numbers, said Coronation analyst Nic Stein.

MMI has delivered disappointing returns to shareholders in recent years, with its largest business units bleeding market share. In January, it announced the return of former CEO Hillie Meyer. The group’s share of losses in new ventures, including in India, also increased.

This was, however, in line with its business plans.

"We have reset the business to provide a strong foundation for improved performance and future growth," the group said on Friday. The company’s preferred measure of performance, diluted core headline earnings per share, was expected to fall 5%-15% from the year earlier period’s R2 per share.

Gryphon Asset Management portfolio manager Casparus Treurnicht said the rollout of a turnaround would take months, while the group’s focus on the lower end of the market meant it would remain under pressure, given poor domestic conditions.

"In the meantime, competitors are very aggressive and will be taking market share," said Treurnicht.

On Friday MMI’s share price fell 1.27% to R16.39, having lost 21.95% so far in 2018, compared with a 2.56% fall in the JSE’s life assurance index.