Australia’s Challenger climbs to 1-1/2-year high on bright outlook, annual earnings beat By Reuters

By Rajasik Mukherjee

(Reuters) – Challenger Ltd shares rose to their highest in about 16 months on Tuesday after the Australian investment manager beat estimates on annual profit, while investors also welcomed its earnings outlook for fiscal 2025.

The stock rose about 10% to its highest level since Feb. 20, 2023. The stock posted its biggest intraday jump since Oct. 20, 2022, and is poised for a fifth straight session of gains, if the trend continues.

Challenger reported a net profit before tax (NPBT) of A$608 million (US$400.73 million) in the 2024 financial year, up 17% from 2023 levels, boosted by a 110% growth in the Sydney-based company’s lifetime annuity sales of A$1.5 billion.

Annuities are income products, sold by insurance companies, that provide financial stability to the buyer after retirement.

Challenger beat UBS and Citi’s expectations for net profit after tax of A$600 million and A$603 million, respectively.

The company, which increased its group assets under management to A$127 billion in the 2024 financial year, expects its 2025 net profit to be between A$640 million and A$700 million.

Analysts at UBS were upbeat on the 2025 outlook, saying the midpoint of the FY25 forecast was in line with their consensus.

“With Challenger on track to meet its FY25 ROE target and with much better-than-expected capitalization due to perpetual interest, we expect the market to like this outcome,” Citi analysts wrote in a note.

The company said that the Challenger Life insurance segment, which provides financial security after retirement, has the ability to handle different market cycles and support future growth.

Challenger attributed the rise in profits to lower costs and strong performance in the life insurance sector, and announced a final dividend of 13.5 Australian cents.

(1 USD = 1.5172 AUD)