Power Corp. of Canada Earnings: Great-West Solid, but Alternative Asset Management Losses Continue

Power Corp. of Canada POW reported middling first-quarter results as Great-West Life remained solid but other stand-alone businesses, including alternative asset management platforms Sagard and Power Sustainable, struggled. The firm reported adjusted net earnings of CAD 514 million, or CAD 0.77 per share, compared with CAD 442 million, or CAD 0.65 per share, in the first quarter of the previous year. Adjusted earnings from the publicly listed operating companies (Great-West, IGM Financial, and Groupe Bruxelles Lambert) were reported at CAD 682 million in the first quarter compared with CAD 613 million in the previous year. The company declared a quarterly dividend of 52.50 cents per share, representing a 5.8% dividend yield at the current stock price. Power Corp.’s net asset value per share stood at CAD 46.89 as of the end of the first quarter of 2023, up from CAD 41.91 at the beginning of the quarter primarily because of the price appreciation in Great-West’s stock price. We are maintaining our CAD 41.50 fair value estimate for Power Corp. after incorporating the first-quarter results.

Power Corp.’s biggest operating company, Great-West, reported solid results in the first quarter, with base earnings of CAD 808 million versus CAD 712 million in the year-ago quarter. The first-quarter results equated to an adjusted return on equity of 15.8%. The results were affected by favorable group insurance disability experience in the Canada segment, partially offset by unfavorable mortality experience in Canada, Europe, and the capital and risk solutions segments.

IGM closed the March quarter with CAD 260.4 billion in managed assets, up 4.4% sequentially but down 2.9% year over year. It reported adjusted net earnings of CAD 206.5 million in the first quarter compared with CAD 219.3 million a year ago, resulting in adjusted pretax operating margin of 28.2%.