FTSE 100 pension giant Phoenix Group has set ambitious new targets for 2026 after beating expectations in the 2023 financial year.
Adjusted operating profit increased 13 per cent year-on-year to £617m, driven by “strong growth” in its pensions and savings business.
Its loss after tax narrowed significantly, from over £2.6bn last year to just £88m this year. This was largely due to “lower market volatility.”
Last month Phoenix confirmed it had hit its 2025 target for long-term cash generation – a key measure of future profitability – two years early. Total cash generation in 2023 was just over £2bn, exceeding its upgraded target of around £1.8bn.
This included a roughly £400m benefit from the Part VII transfer of Standard Life announced in November.
Phoenix acquired Standard Life in 2021, signalling its entry into the consumer market. Previously the firm had bought up closed funds which were not open to new entrants, nicknamed ‘zombie funds’.
The firm’s new targets for 2026 included total cash generation of £4.4bn across 2024 to 2026 and an adjusted operating profit of £900m in 2026.
“Phoenix’s vision is to be the UK’s leading retirement savings and income business, and we are making great progress in delivering our strategy to achieve this, as our strong 2023 financial results demonstrate,” chief executive Andy Briggs said.
“The next phase of our strategy will see us balance our investment across our strategic priorities to grow, optimise and enhance our business. This will support us in delivering the ambitious new 2026 targets we are announcing today,” he continued.
The firm upped its dividend by 2.5 per cent to 26.65p per share, giving a total dividend of 52.65p for the year.
“Overall, we view the update as a solid set of results, with cash generation more sustainable than we have assumed in our estimates,” analysts at Peel Hunt said.
Reports earlier this week suggest that Phoenix’s heritage pensions may come into the scope of the new Consumer Duty as customers can often pay charges higher than the current limit.
The firm confirmed that it had set aside a £70m provision for the new regulation following a “comprehensive review of our back book products.”
“We are actively working to ensure we are well positioned to comply fully with the upcoming Consumer Duty requirements,” Phoenix said.