Shares in the debt management company, Credit Corp Group (CCP) plummeted as much as 47.1% to $5.60 after it downgraded its FY2008 financial net forecast by as much as 29%.
The Sydney-based company revised its earnings down to between $17 and $19 million from the previous guidance of $24 million.
More than 4 million shares had changed hands, significantly up from a daily average of 110,000 shares.
The cut brings the forecast in line with financial year 2007's net profit after tax of $19.63 million, indicating the company will deliver zero growth this year.
Credit Corp says the cut in fiscal 2008 net profit is due to increased costs from growth in employee numbers and infrastructure investments together with a change of mix of its portfolio of purchased debt ledgers.
"We believe it is essential to make timely investments in the Company's ongoing operations to meet the requirements of future activities as we see significant opportunity for substantial increases in supply of consumer debt into our market," chief executive officer Geoff Lucas said.
"It is, however, disappointing not to have maintained our FY08 earnings growth targets whilst undertaking such a rate of expansion," he said.
Human resource issues have also been a factor in the overall margin decline, due to new recruits not reaching ‘anticipated productivity levels' and this subsequently affecting the productivity of more experienced personnel, whose increased training and supervisory activities have been increased.
After its listing in late 2000 and raising $5.5 million through the issue of 11,500,000 shares at 50 cents each, Credit Corp has been a consistently strong performer, with the share price increasing steadily to hit an all time high of $12.99 in July 2007.
Credit Corp Group acquires debt ledgers from financial institutions and negotiates repayments with account owners.
Since pulling back from its highs, the stock has been trading around the $11 dollar mark.
Thursday's profit downgrade came at a bad time, given investor nervousness after the decline in US markets overnight.
Stock closed 47% or $5.01 at $5.58.
