Shares in retirement fund manager Challenger Financial have bounced back after an early dive following confirmation of a 97 per cent plunge in first-half profit.

The company said on Tuesday that net profit for the six months to December 31 had fallen from $195.4 million a year ago to $6.1 million, against a backdrop of poorly performing equity markets and policy liabilities in its life division, which provides annuities.

But shares in the company climbed 1.47 per cent or 11.5 cents higher to $7.945 at 1500 AEDT, with chief executive Richard Howes optimistic about an expanding retirement income market.

‘Our results for the first half have clearly been impacted by the difficult operating environment we’re experiencing, with increased market volatility, industry disruption and political uncertainty playing out across the sector,’ Mr Howes said on Tuesday.

‘While some of these factors are beyond our control, the fundamentals underpinning our business remain supportive.’

Challenger had flagged the profit slump last month in a trading update that prompted a 17 per cent share price fall in a single day.

First-half revenue fell 20.8 per cent to $893.5 million, while the company also confirmed an expected cut to full-year normalised profit guidance, now between $545 million and $565 million, from between $590 million and $612 million.

Challenger does not expect to reach its 18 per cent normalised return on equity before tax target.

Meanwhile, the company will pay an interim dividend of 17.5 cents, fully franked, unchanged from last year, and said it will continue to target a dividend payout ratio of 45 to 50 per cent of normalised net profit after tax.

Challenger shares remain more than 40 per cent down from an historic high of $14.28 in December 2017.


* First-half net profit down 96.9pct to $6.1m

* Revenue down 20.8pct to $893.5m

* Interim dividend of 17.5 cents, fully franked and unchanged from last year