Credit Corp Group Limited (ASX: CCP) shares will be closely watched this morning after reporting its financial results for the year to 30 June 2018 (FY18).
Credit Corp is one of the largest debt collection agencies in Australia. It also has a growing consumer loan book, operating under the Wallet Wizard brand. The company says that it has the largest database, the highest asset turnover and the lowest cost to collect debts.
Here are some of the highlights from its report:
- Revenue increased by 12% to $299 million
- US Debt buying revenue went up by 83% to $24 million
- Net profit (NPAT) up by 17% to $64.3 million
- Profit per share (EPS) increased by 16% to $1.351
- Yearly dividends per share rose by 16% to $0.67
According to Bloomberg, analysts were expecting net profit of $63.7 million, so Credit Corp appears to have beaten expectations.
Credit Corp was pleased to point out that its profit per share has increased by an average of 27% per year since the Global Financial Crisis hit in FY08. Its return on equity (ROE)
has also risen from 8% in FY08 to 24% in FY18.
The company reported its debt collections had grown by 4% in Australia and New Zealand in FY18 despite a sizeable decrease in purchased debt. Credit Corp buys debt at a discounted price and then collects it over the course of the next few years.
Free cash flow has reduced gearing to 41%, the company said, and management believes strong cash flow will increase its debt headroom in FY19.
Outlook
Credit Corp expects that FY19 Australian & New Zealand collections and earnings are on track to achieve FY18 levels and has guided FY19 net profit will be between $67 to $69 million.
Investors will now turn to Collection House Limited (ASX: CLH) to see how Credit Corp’s main ASX-listed competitor is doing.
