L&G announces biggest ever share buyback but FY profit falls short

(Sharecast News) - Legal & General announced its biggest ever share buyback on Wednesday and said it was on track to hit its financial targets, but shares slumped as full-year core operating profit came in a touch light. Full-year core operating profit rose 6% to £1.62bn - versus consensus expectations of £1.65bn - while core operating earnings per share increased 9% to 20.93p, in line with the guidance given at the half-year results.

Total operating profit, which includes the non-retained US business and L&G's Corporate Investment unit portfolio focusing on the disposal of non-strategic assets, grew 3% to £1.8bn.

IFRS pre-tax profit surged 143% to £807m.

L&G declared a dividend per share of 21.79p, up 2% on the previous year, and announced a £1.2bn share buyback, which means it will be returning more than £5bn to shareholders over 2025-2027.

Chief executive António Simões said: "Today we're reporting a strong financial performance for 2025, and meaningful progress in reshaping L&G. We have addressed legacy complexities, strengthened our foundations and we are driving forward our growth strategy across our core businesses. This week we will begin a £1.2bn share buyback - the largest in our history - which, together with guided dividend per share growth of 2% this year, will bring planned returns to shareholders to £2.4bn over the next year.

"As a sharper, more focused business, we are well-positioned to capitalise on the structural, growing demand for long-term investments and retirement income. We continue to extend our market leadership in defined benefit pension risk transfer, while in Retail we are capturing the defined contribution opportunity, supported by technology, customer service and operating leverage."

At 0930 GMT, the shares were down 5.2% at 244.98p.

Dan Coatsworth, head of markets at AJ Bell, said: "Legal & General failed to hit market forecasts for profit growth in 2025, causing the shares to weaken and seeing £750 million wiped off its market value.

"Core operating profit of £1.62 billion was marginally below the £1.65 billion forecast, which overshadowed the launch of its largest ever share buyback. The earnings miss is unfortunate but not catastrophic. Most investors own this story for the juicy dividends and they're still flowing like fine wine on a summer's day."

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the results had a few moving parts, some slightly better, some a touch weaker, but ultimately landed broadly in line with expectations.

"Core operating profit came in close to consensus, while capital generation was a little stronger than forecast, helping support the expected £1.2bn share buyback following the sale of its US protection unit. Overall, it was a steady set of numbers, but a couple of softer areas have weighed on shares in early trading.

"Looking ahead, the simplification process is underway as management works to present a clearer picture of where growth is coming from across what has historically been a complex, sprawling business. That's a positive step in helping investors better understand the key drivers of future earnings. In the meantime, shareholders are being well paid to sit tight while the business reduces complexity, and the new CFO has time to assess the medium-term strategy."