Shares in debt collection and lending company Credit Corp were up more than 14% at one stage yesterday after the company did better than expected in the December half year and revised its guidance upwards for the second time in three months.
As a result of the better first half performance and an improving outlook, the company now expects full-year Net Profit After Tax (NPAT) of between $85 million and $90 million, up from earlier guidance of between $70 million and $85 million.
Credit Corp said revenue for the December half dipped 2% to $188 million but net profit was up 10% to $42.3 million.
Credit Corp shares closed up 8.8% at $32.06 after touching a day’s high of $33.68 in the morning session.
Credit Corp said the improvement came from its US debt buying, up 33% which produced an after-tax profit of $8 million, but this was off-set by a 26% decline in net profit from Australia and New Zealand lending to $6.7 million.
“Favourable operational performance has produced a strong start for 2020-21 and this is expected to continue over the balance of the year,″ the company wrote in a letter to shareholders this morning, adding the recent Collection House acquisition would drive earnings while organic growth recovers from the COVID disruption.
“The company remains debt-free, with $400 million in net cash and undrawn credit lines, putting in a strong position a seize further one-off opportunities and grow investment across all segments as market conditions allow.″
The interim dividend will remain steady at 36c a share.
The company said its Collection House purchase was completed on the last day of the period “and will make a strong contribution over the second half.”
CEO Thomas Beregi said in the statement to the ASX “that while all credit issuers selling prior to COVID-19 had resumed their sale programs purchasing volumes were only now starting to grow as the impact of issuer forbearance dissipated. “The Collection House purchase will enable us to maintain our operational scale and grow collections while ongoing purchasing volumes recover” he said.
