Alexander Forbes Targets 12% Profit Growth Over Next Five Years

JOHANNESBURG (Capital Markets in Africa) – Alexander Forbes Group Holding Ltd., a South African provider of retirement, investment and insurance services, plans to as much as double the pace of profit growth over the next five years.

The company is targeting an increase in operating profit of 10 percent to 12 percent until 2022, compared with average growth of 6 percent between 2013 and 2017, Chief Executive Officer Andrew Darfoor said in a presentation in Johannesburg on Wednesday.

As the company grows revenue, it will seek to contain costs and focus on margins, he said. “The impact of both of those components should go straight to the bottom line.”

Since taking the role in September last year, Darfoor, 43, is focusing on better integrating the company’s different business units across consulting, retirement-fund administration, asset management and insurance to lift sales and improve cash-flow generation. He is also seeking to boost return on equity, a measure of profitability, to more than 14 percent from 12 percent, while maintaining dividend cover at 1.5 times.

With operations in Nigeria, Namibia, Botswana, Zambia and Uganda, Alexander Forbes is also readying itself to benefit from pension-fund reforms across the different markets. The company this week announced it bought a significant stake in African Actuarial Consultants, Zimbabwe’s largest independent actuarial consultancy.

The stock has gained 6 percent since Monday, when the company announced the payment of a special dividend and said it will buy back some of its stock. Operating profit rose 4 percent to 796 million rand ($62 million).