Business briefing
Food prices up IAG’s profit jumps
New Zealand food prices have increased at a 0.8 per cent annual pace in January as dairy prices rose after unfavourable weather dented production. That was the smallest annual increase since April 2017 when prices advanced 0.2 per cent, Statistics New Zealand said. Butter prices surged 43 per cent in the year to January, reaching their highestever level. Meanwhile, avocado and pumpkin prices more than doubled over the year. Avocados were at their highest price for a January month since 2004, with the average price of a 200g avocado $2.78 in January 2018, compared with $1.29 in January 2017. Grocery food was the highest upwards contributor, rising 1.4 per cent, led by higher prices for bread, up 4 per cent, and chocolate, up 11 per cent. Insurance Australia Group has booked a 24 per cent jump in profit thanks to a significant increase in premiums and has revealed plans to review its Asian arm, saying it is considering “all options”. IAG reported a net profit of A$551 million in the six months to December 31, up from A$446m a year ago, helped by a more than 30 per cent lift in profit from insurance to A$743m. A better than 30 per cent gain in investment income profit to A$138m also drove the result. Revenue grew 1.1 per cent to A$8.3 billion for the halfyear, with a 0.6 per cent growth in the value of its gross written premium (GWP). IAG said headline margins in its insurance business improved to 17.3 per cent, from 13.5 per cent previously, due in part to lower claims costs for natural disasters. The company also said margins improved in its motor insurance and commercial insurance divisions thanks to higher premiums and a steadying in the NSW Compulsory Third Party insurance business, following a downturn when the scheme was overhauled in late 2017. IAG said the 2.3 per cent growth in the value of GWP for its consumer business — which includes motor and home insurance — was predominantly driven by increases in premiums. Motor GWP increased 4.9 per cent. The company also confirmed a strategic review of its Asian division, which could result in IAG selling off the businesses, after saying opportunities are “limited” in the market. Chief executive Peter Harmer yesterday said IAG’s Asian division had made an increased contribution in recent months but “all options” were on the table. IAG shares rose 21c, or 2.9 per cent, to A$7.48 yesterday afternoon. — AAP