Why the AMP (ASX:AMP) share price is tumbling 9% today

The AMP (ASX:AMP) share price opened sharply lower today following the release of the company's annual results. Here's what you need to know.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

AMP Ltd (ASX: AMP) shares opened sharply lower this morning following the release of the company's FY20 results. At the time of writing, the AMP share price is trading at $1.40, down 9.09% for the day so far.

Let's take a look at what the company had to say.

What's driving the AMP share price lower?

The AMP share price is once again on the slide after the company advised in its investor report that coronavirus significantly impacted its annual outcomes across all business units.

During FY20, the company held $255 billion of total assets under management (AUM), 6% lower than during FY19. AUM-based revenue fell approximately 10.5% to roughly $1.5 billion. 

AMP reported an underlying net profit after tax (NPAT) of $295 million, a 33% decline compared to the $439 million delivered in FY19.

The AMP share price is coming under pressure on news the company did not declare a final FY20 dividend. This decision was based on the board presently assessing AMP's portfolio, current market conditions and overall business performance.

According to AMP, the board intends to pay dividends, execute a share buyback program and carry out additional capital initiatives in 2021. 

AMP CEO comments on poor performance

Commenting on the company's annual performance and overall business environment, CEO Franceso De Farria said:

Volatility in markets and the economic downturn impacted the investments and financial security of many Australians and New Zealanders. True to our long-term purpose, AMP stepped up to support our clients navigate the uncertainty, providing early access to their super, pauses on their mortgage repayments, relief on their rent, and advice and guidance when needed.

AMP stated that it continues to progress its three-year transformation strategy, amid challenging market conditions.

Mr De Farria continued that:

Underpinning our strategy, we have also accelerated our cultural transformation and are determined to drive a culture of inclusion, accountability and high performance. 

The cultural transformation initiative follows AMP's August 2020 scandal in which two previous CEOs, Bob Pahari and Alex Wade, stepped down following matters involving sexual harassment. 

AMP share price and company snapshot

AMP is a financial services company that operates in Australia and New Zealand. It provides a range of services including superannuation, life insurance, investments and advice. It also offers retail banking services, has partnerships in China and Japan and investments around the world.

The AMP share price has fallen by more than 70% over the past five years and by nearly 10% since the start of this year alone.

Based on the current AMP share price, the company has a market capitalisation of around $5.29 billion with 3.44 billion shares outstanding.

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »