Tower turns the tide on recent woes
New Zealand-based financial services firm Tower has suggested an end to its recent troubles after posting a strong full year result today, with the group now moving to complete a two year recovery strategy that has seen significant asset write-offs, cost restructuring and consolidation across its operations.
Tower’s two-year rebuilding program commenced in early 2003 and indications are it is beginning to bear fruit after the reporting of a jump in operating earnings today to NZ$27.9 million for the year ending September 30.
“2004 has been a strong year of recovery for Tower after two tough years - it’s a good result after two years of losses,” group managing director Keith Taylor told a media briefing in Sydney this morning.
Tower also reported a significant improvement in profit after tax, with this year’s figure of NZ$56.6 million a dramatic improvement on last year’s NZ$148.9 million loss. The turnaround in Tower Australia, which reported a net profit of NZ$23.2 million compared to a NZ$13.1 million loss last year, was a key factor in the performance.
“We have rebuilt the business on a sustainable basis - we haven’t gone for any quick fixes - and have done all the hard work so are now going to reap the benefits from it,” Taylor said.
The strong operating earnings this time around were in stark contrast to the NZ$9.7 million shortfall in 2003.
“Operating earnings were hammered in 2003, as there were restructuring costs and mediation costs… There are still significant such costs in the 2004 results but as you can see there has been an overall improvement in the business.”
Taylor said Tower was an extraordinarily complex business when he joined a few years ago, however the restructuring and cost cutting measures that have now been undertaken, along with the proposed spin-off of its wealth management arm, have left the group in a much stronger position and able to focus on its core area of expertise.
“Part of the continuing simplification of Tower’s business is a reduction in the number of business units we have, when I took over two and a half years ago there were 10 or 11 operating companies, we are now down to three divisions with all of the amalgamation of our businesses in NZ.
“Our focus now is very much on our insurance business and the related additional products that we sell,” Taylor said.
Taylor was unable to offer any more detail on the sell-off of its wealth management arm, which includes Bridges and Tower Trust, due to the documentation on the proposal not yet being in the public domain.
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