The Challenger Ltd (ASX: CGF) share price has come under pressure following the release of a presentation ahead of the annuities company's investor day.
In early trade the Challenger share price sank 12% to a 52-week low of $6.72.
What was in the presentation?
As well as providing a detailed breakdown on the growth opportunities that Challenger has thanks to long-term tailwinds such as ageing demographics and a world class accumulation super system, the company provided an update on its recent performance and its expectations for FY 2020.
In April the company provided a trading update and reaffirmed the downgraded guidance provided ahead of the release of its half year results.
That was for normalised net profit before tax to be between $545 million and $565 million in FY 2019, compared to its previous guidance of $591 million to $613 million.
This morning management revealed that due to the challenging market environment, it now expects to achieve the bottom end of its guidance range in FY 2019. This is likely to mean a small decline on FY 2018's normalised net profit before tax of $547 million.
Outlook for FY 2020.
In addition to this, Challenger released its guidance for FY 2020 and unfortunately it looks likely to be another step backwards in respect to profits.
Management's FY 2020 guidance range for normalised net profit before tax is $500 million to $550 million. This assumes lower equities growth, lower interest rates on shareholder capital, and the impact of its distribution, product, and marketing initiatives.
One positive, though, is that management intends to maintain its dividend in FY 2020, subject to market conditions and capital allocation priorities.
Elsewhere in the financial sector today, Commonwealth Bank of Australia (ASX: CBA) shares have edged higher after announcing the divestment of its Count Financial business to Countplus Ltd (ASX: CUP) for $2.5 million. This transaction will result in CBA exiting a business that is estimated to incur a post-tax loss of approximately $13 million in FY 2019.
