NIB shares are edging lower today. Here’s the details.
The post NIB (ASX:NHF) share price struggles as despite big profits in FY21 appeared first on The Motley Fool Australia. –
The NIB Holdings Limited (ASX: NHF) share price is sliding today and currently trades 2.87% down at $6.77 apiece.
NIB shares are struggling in early trade after the insurance giant released its FY21 annual report before the market’s open.
The company had already released its FY21 earnings in August, however, a more detailed overview of FY21 operations is contained in NIB’s annual report.
NIB share price slides despite strong profit growth in FY21
It was a strong year for NIB’s operating performance, as it recognised growth across all measures of profitability in FY21.
Its premium revenue came in at $2.2 billion for the year, up almost 5% from FY20. This was backed by investment income growth of 212%, which contributed a healthy $51.8 million to its earnings.
Underlying operating profit gained almost 40% to $205 million, which carried through to an 85% year on year gain in net profit after tax (NPAT).
Another takeout from its annual report is that NIB generated a return of 7.9% on the capital it invested throughout the year. That’s a total of $19.1 million, and in line with the figure for FY19.
That’s important to know because it’s well above the $2 million annual interest expense NIB has on its debt.
With this momentum, the board was able to declare a 14 cents per share final dividend.
This brings the full year dividend for FY21 to 24 cents per share, with NIB paying out 68% of NPAT in dividends to shareholders.
Investors will realise this dividend into their brokerage accounts on 5 October, or participate in the dividend reinvestment plan (DRIP), if eligible.
Aside from this, NIB also remains committed to sustainability, by taking a number of steps to improve its ESG framework.
For instance, it has invested over $2.7 million in community funding, including “a $1 million NIB foundation investment towards chronic disease prevention”.
It also developed a Responsible Investment Policy that aims to improve how the company screens sustainability factors in its investment portfolio.
What’s next for NIB?
NIB has committed to becoming carbon neutral by the end of FY22, by reducing its overall carbon emissions.
It also sees continuing challenges over the next year, as the COVID-19 pandemic continues to mark uncertainty for the company.
As such, the company has revised its forecasts on its travel business, due to ongoing uncertainties on border restrictions.
Its set revenue forecasts are in line with external industry forecasts and federal budget expectations. NIB assumes a gradual recovery in travel volumes, with a “full return to pre-COVID levels in FY24”.
NIB shares have climbed 14% this year to date, and have edged almost 0.5% higher this past month.
Should you invest $1,000 in NIB Holdings right now?
Before you consider NIB Holdings, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and NIB Holdings wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
NIB (ASX:NHF) share price lower despite ACCC authorisation
Why BHP, NIB, Northern Star, & Redbubble shares are tumbling lower
The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.