Liberty Holdings yesterday shocked the market by climbing the most on the JSE in more than three years only to reverse the gain in later trade. The shares surrendered the early 9.3 percent gains in a rally fuelled by an expected 55 percent increase in earnings for the six months to end June. 

The share price reached its highest peak at R118.50 before shedding the gains. Equities have rallied in the last six months, with the JSE-All Share Index up by 10 percent in the first half of the year, with Liberty attributing the expected increase in earnings to improved investment sentiment during the period.

 “The shareholder investment portfolio (SIP) benefited significantly from improved investment market returns, particularly in respect of equities, in the first half of 2019,” the group said in a trading statement. Liberty said it expected its normalised headline earnings a share, the group’s primary earnings measure, to increased between 45 and 55 percent, to 698.9 cents and 747.1c a share from the prior year. 

The group said that the current risk profile of the SIP is similar to a conservative balanced portfolio and is managed with a long-term through the cycle investment horizon. “Progress is being made towards re-building a competitive and sustainable business, resulting in improved operating earnings while the focus on new business volumes continues,” it said. Liberty also expects its headline earnings per share to increase by between 25 and 35 percent, to be between 704.4c and 760.7c, while its basic earnings per share are expected to increase by 18 and 28 percent, to be between 664.9c and 721.3c during the period. 

Chief executive David Munro, who took over the reins in February 2017 from Thabo Dloti, has focused his attention on immediately turning the business around. The turnaround was evident in the group’s full-year results to end December 2018, when Liberty reported a 42 percent increase in normalised operating earnings to R2.01 billion for the year, with improved operational performance in the South African insurance operations and Stanlib South Africa businesses. 

However, the performance was offset by a 17 percent decline in normalised headline earnings to R2.26bn and Liberty Insurance Africa which reported a 19 percent decline in earnings during the period. But the focus in the medium term has been on restoring the financial performance of the SA retail insurance business, improving the investment performance of Stanlib, simplifying the group’s overall operations and expanding its relationship with the Standard Bank Group. Standard Banks owns about 54 percent of Liberty. Liberty expects to release its halfyear results on August 1.