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AMP plunges again on A$896m loss
By Geoff Hiscock
SYDNEY, Australia (CNN) -- The troubles for Australian financial services giant AMP continued Wednesday after it unveiled a full-year loss of A$896 million ($538 million) for 2002 and warned the 2003 outlook was uncertain. AMP's woes stem from sharp falls last year in the FTSE stock index in London, which put pressure on the capital position of its operations in the United Kingdom. Stock in the company plunged to another record low of A$7.45 in Wednesday trade, before closing down 2.65 percent at A$7.71. AMP shares are now down 31 percent for the year so far, and have lost more than 60 percent since touching a one-year high of A$19.76 last March. Chief executive Andrew Mohl said Wednesday shareholders had "every right to feel disappointed in AMP's recent performance." "It is clear our strategy was over-ambitious, particularly in the UK," he said. Mohl took over in September after former CEO Paul Batchelor resigned to take responsibility for the share price slide. The company, Australia's largest fund manager and life insurer, has been rocked by the global equity slump, forcing it to cut jobs in Australia and the United Kingdom, and to write down asset values. Writedowns and restructuring
AMP said writedowns and restructuring costs of A$1.571 billion resulted in the $896 million loss. The figure was in line with market expectations. Mohl warned that the weakness in UK equity markets was continuing and the 2003 outlook was for lower earnings. "Overall the operating margin outlook for 2003 is very uncertain and all current forces are pushing earnings lower," he said. Half the company's board stepped down Wednesday, including chairman Stan Wallis. (Full story) He has been replaced by deputy chairman Peter Willcox. Wallis said when Willcox was appointed as his deputy in December that he would not retire until mid-2003. But on Tuesday Wallis said he now believed it was in AMP's best interests for Willcox to take over immediately. Another director, Patricia Cross retired Wednesday, and three others, Sir Malcolm Bates, Paul Mazoudier and Ian Renard, will retire within six months. Mohl began a massive overhaul of AMP's operations after taking over from Batchelor in late September. It involved more than 3,000 job losses -- in addition to 1,500 job cuts announced last June -- and the closure or sale of businesses in the UK, Australia and New Zealand. Mohl said Wednesday that the consequences of his tough decisions had been unpleasant, but the moves were necessary to "face the realities of extended bear markets". Mohl confirmed that a payout to Batchelor was yet to be concluded and AMP was in dispute with its former CEO about this. There is speculation that Batchelor is demanding up to A$20 million.
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