Credit Corp climbs in 'relief rally'
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More news: Shares in Credit Corp climbed in morning trade on the ASX after the debt collector posted mixed full-year results but presented a positive outlook for FY25.
Credit Corp shares were up 5.3% to $16.01 by 11:30am AEST, having tumbled more than 30% over the last 12 months.
E&P Capital analyst Olivier Coulon said Credit Corp's result was "very much inline with our expectations", with a strong lending result supporting the overall earnings.
What they said: Coulon said: "The stock has been very weak going into the result. We think investor expectations were already very low. While investors may be disappointed at the cautious approach [management] is taking in the US we suspect this is in the price at these levels. The call will be important but we think there may be a relief rally today."
Credit Corp posts profit drop, slashes full-year dividend
The news: Credit Corp flagged a hit to full-year profit, as growth in the debt collector's lending segment earnings was offset by a continued run-off in its core Australia and New Zealand debt buying business and degraded US collection conditions.
The numbers: Underlying NPAT for the year was $81.2 million, an 11% fall year on year. Including a $45.6 million impairment on its US loan book, Credit Corp recorded total NPAT of $50.7 million, down 44% from the prior year.
The company also cut its divided by 46% to 38 cents.
However, revenue grew 10% to $519.6 million, boosted by its Australian and New Zealand lending business, which climbed 21% to $179.1 million.
Credit Corp also set a positive outlook into FY25. It said strength in its consumer lending loan book, US operational improvement and a stabilised Australia and New Zealand debt buying business should produce NPAT of $90 million to $100 million for the year. The midpoint of this range is a 17% increase relative to FY24.
The context: Credit Corp said purchasing conditions in the US remain favourable, with steady pricing and supply expected to increase over the near-term. Collection conditions, which deteriorated late in FY23, have remained static despite ongoing uncertainty as to the outlook for US credit-impaired consumers.
The company noted that US operational performance improved in the final quarter of FY24, with record quarterly collections, reflecting more than a year of investment in the US operation, with significant increases in customer contact and higher rates of conversion in paying outcomes.
In Australia and New Zealand, the debt buying market has remained subdued, Credit Corp said, with sale volumes still substantially lower than pre-COVID levels. However, the company said it continues to hold a strong market share and in FY24 secured the highest direct-from-issuer investment volume in the market since FY20.
The source: ASX announcement
