The FTSE 100 may have struggled to make headway this year, but one of its constituents, Aviva (LSE: AV) (NYSE: AV.US), has seen its share price rise by nearly a fifth.
Longer-term shareholders might say “it’s about time, too”. Despite doubling over the last two and a bit years, the share price is still at half the level it was back in 2001. Indeed, Aviva has been in turnaround mode for what seems like an eternity.
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A good start, but much more to come
The current CEO, Mark Wilson, summed things pretty well earlier this year when Aviva released its 2013 results, saying:
“The turnaround at Aviva is intensifying. We have focused the business on ‘cash flow plus growth’ and the benefits are starting to be reflected in our performance.
Following our exit from a number of low margin, underperforming or non-strategic businesses, Aviva is simpler, more focused and better managed. We have significantly improved our capital surplus, increased our liquidity and have a stronger leadership team.
Although we have made progress, I want to guard against complacency. Aviva still has issues to address. Have we made progress? Yes, some. Is it a little faster than anticipated? Probably. Have we unlocked the full potential at Aviva? Not yet.”
Running up that hill
The streamlining of Aviva has continued in 2014 with disposals in Turkey, South Korea and Spain. The half-year results released in early August even saw a 5% increase in the interim dividend. It’s fair to say that Aviva shareholders haven’t seen the words “increase” and “dividend” in the same sentence very often in recent years.
The improvement in operating profits for the first half of 2014 was fairly small but hard-fought, as Aviva had to face “an overhaul of the UK annuity market, a particularly harsh winter in Canada, UK floods and a stronger Sterling.”
No doubt there will be many more hurdles to overcome before Aviva is back to full strength. The reform of the car insurance market in the UK, announced earlier this week, is a good example of one such potential obstacle. But Aviva has not looked this healthy for many, many years.