M&G Share Price Rallied 4.19% on Its Upbeat Full-Year 2023 Profits

The M&G PLC (LON: NMG) share price rallied 4.19% after it released its full-year 2023 financial results. The company's financial performance saw a notable increase, with the adjusted operating profit before tax climbing to £797 million, a 28% rise from the previous year's £625 million.

Robust Asset Management results and enhanced contributions from the Life, Wealth, and Corporate Centre sectors fueled the above improvement. Significantly, the company rebounded from a substantial loss in 2022 to post an IFRS profit after tax of £309 million. 

The turnaround was primarily due to an increased adjusted operating profit and a significant decrease in losses caused by short-term fluctuations in investment returns.

The operating change in the contractual service margin (CSM) jumped to £355 million, a substantial 175% increase from the previous year's £129 million, mainly due to a higher expected return on with-profits business CSM following a rise in risk-free rates during 2022.

Operating capital generation also increased by 20% year-on-year, totalling £996 million, supported by strong underlying capital generation and other operating capital activities.

Over the past two years, the company has generated £1.8 billion in operating capital, positioning it well to meet its three-year target of £2.5 billion in operating capital generation by the end of the year. The Shareholder Solvency II coverage ratio improved to 203% from 199%, reflecting the company's strong financial position.

A total ordinary dividend of 19.7 pence per share for 2023 has been proposed, maintaining the company's stable or increasing dividends policy. A second interim dividend of 13.2 pence per share will be paid in May 2024.

The company has seen positive momentum in the first year of its Transformation programme, which aims to create a more efficient organisation that can better serve clients, reduce costs, and unlock growth opportunities.

Despite inflationary pressures, the company kept its managed costs in 2023 at the same level as in 2022, thanks to £73 million in cost savings. Several cost-saving measures have been implemented, including a voluntary redundancy programme, a 15% reduction in UK office expenses, restructuring the Private Markets team, and an 11% decrease in consultancy and contractor costs.

The company has also improved its client service by migrating 2 million clients to its strategic policy administration system, reducing complaints and claim processing times in the Life business.

M&G share price. 

The M&G share price rose 4.19% to trade at 241.2p from Wednesday’s closing price of 231.5p.