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MONY shares drop 7% as management and analysts flag headwinds

Shares in MONY Group PLC (LSE:MONY) fell 7% after the operator of MoneySuperMarket reported first-half results that analysts said were resilient in the face of headwinds in end-markets.

First-half revenue was up 1% to £225.3 million and EBITDA rose 2% to £75.1 million from the price comparison group.

The main drag on revenue growth has been the insurance business, representing around 52% of revenue, which fell 2% as expected, said Panmure Liberum.

Among the other segments, Money (23% of revenues) was up 4% on the back of credit cards and improving personal loans, while Home services (10% of revenues) jumped 29% with energy making a comeback and as well as broadband.

On the outlook, the management comment was: "Despite the headwinds faced in some of our end markets, we continue to leverage our strength in breadth and the agility of our platform to deliver resilient financial performance whilst maintaining strategic momentum."

UBS said the overall revenue and gross profit were "weaker than expected", but adjusted EBITDA was a "strong beat".

Revenues were "lower than expected in all divisions, except for Home Services", the Swiss bank said, adding that the announcement "illustrates the current issues facing MONY".

"The group's transactional business model is coming up against revenue headwinds constraining gross profits," UBS explained.

"However, management are working hard from an opex perspective whilst headwinds sustain in order to safeguard profitability... we doubt the shares will materially re-rate until profit growth is again driven by revenues".

MONY said it is continuing to develop its club activity, with SuperSaveClub growing by half a million customers since February.

"The ultimate economics of these incentives are unclear, with a discount at both initial purchase and second purchase affecting gross margin," said Panmure Liberum.

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