Is The Worst Behind Navitas?
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A bit of a relief rally in shares of adult education provider Navitas yesterday as the company revealed the widely forecast loss after warning of higher restructuring costs and write downs related to the closure of two US colleges and an Australian division.
Navitas reported a net loss of $55.8 million for the year to June 30, 2018, down from a profit of $80.3 million a year earlier. Revenue fell 2.5% to $931 million.
The shares rose 2.6% to $4.30 in relief that no other problems were revealed in yesterday’s financial results for the year to June 30.
That’s despite a trim to the full year dividend to 17.4 cents a share (the final is 8 cents, down from 10.1 cents a share) from 19.5 cents a share for 2016-17.
The company said last month the restructuring would cost $130 million, focusing on the US which accounted for about 17% of the division’s revenue and comprises eight SAE creative media colleges.
Navitas's US operations have experienced a change in fortune: once expected to be its next growth leg, they have underperformed as US President Donald Trump's immigration policy limits international student volumes.
The US issues have prompted Navitas to look opportunities elsewhere, including a joint venture with Swansea University in the UK and a move into into the Netherlands.
CEO David Buckingham said the group had to “maintain a disciplined approach to returns on invested capital and ensure the long term viability and growth of our colleges and campuses.”
"Our recently announced decision to rationalise the Careers and Industry Division, including the potential sale of SAE US operations will put the Division on a solid foundation to pursue future growth opportunities.
"We will ensure all affected students will be supported to complete their programs or transition to another suitable provider,” he said in yesterday’s statement.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.