The Credit Corp Group Ltd (ASX: CCP) share price is up more than 11% after announcing its FY24 result.
Credit Corp is a large debt collector in Australia, New Zealand and the US. One of its main activities is to purchase debt ledgers (PDL). A PDL is money owed by customers which is sold by large entities to debt collectors for a cheaper price than the owed amount. Credit Corp then aims to collect the money. It also is a lender to consumers in Australia and New Zealand.
FY24 result
Here are some of the highlights from the report for the 12 months to 30 June 2024:
- Total revenue increased 10% to $179.1 million
- ANZ debt buying and collection services net profit fell 35% to $25.5 million
- US debt buying (before impairment) fell 13% to $14.4 million
- ANZ lending net profit rose 18% to $41.3 million
- Total net profit before the impairment declined 11% to $81.2 million
- US PDL impairment of $45.6 million
- Total net profit down 44% to $50.7 million
- Annual dividend per share down 46% to $0.38 per share
- Final dividend of $0.17 per share
The company noted its lending segment earnings grew strongly, but the impact was offset by “continued run-off in the core ANZ debt buying business and degraded US collection conditions.
Pleasingly, the US operational performance “improved” in the final quarter of FY24 with record quarterly collections, 6% higher than the prior corresponding period despite reduced purchasing. That’s promising for the Credit Corp share price.
Management commentary
The Managing Director and CEO of Thomas Beregi said:
We secured more than half of our expected annual US investment during the month of July alone, as recent operational improvement supported more competitive bidding.
The Wallet Wizard cash loan book will deliver strong earnings growth over the next few years, however, further growth will depend on other products including auto and one of the current or planned pilots being rolled-out at scale.
Mr. Beregi noted that planned investment would not require drawing down the additional capacity available under the new facility but that it provided strategic benefits.
Outlook for the Credit Corp share price
The business said that the record starting consumer lending loan book, US operational improvement and a stabilised ANZ debt buying business should produce FY25 net profit of between $90 million to $100 million.
At the mid-point of the profit range, that equates to profit growth of 17% year on year. PDL investment is “expected to remain in line with the amount outlaid in FY2024 and net lending will likely be substantially lower.”
The performance of Credit Corp shares could depend significantly on how the economies of the US and Australia perform in the coming period, which is impossible to know.
