Debt recovery group Credit Corp shares softened yesterday after the company forecast a 2021-22 performance not that much different to the 11% rise in net profit in the year to June.
The company told the ASX in its annual results that it now expects to see full year profits of between $85 million and $95 million in 2021-22,
That isn’t all that much more than the $88 million it earned in 2020-21.
The shares fell to a day’s low of $27.90 before recovering steadily to trade up 0.1% at the end at $28.57.
Credit Corp though thinks it’s a solid outlook thanks to what it called “considerable momentum” from purchasing a lot of debt in 2021 and an expectation there will be more even consumer debt to purchase and chase down in the next 12 months.
The shares fell 1% to $28.73 as the market was expecting to see guidance for full year profit of at least $100 million in 2021-22.
Credit Corp also noted “a rapid increase in demand” in late 2020-21 as government stimulus programs like the COVID supplement were removed.
It will pay a final dividend of 36 cents a share, unchanged on the interim for 2019-20. No final was paid for the year to June, 2020.
CEO Thomas Beregi said all segments exceeded full year expectations.
“We used our analytical ability to provide a great price, our operational capability to promptly integrate and uplift collections from the largest individual purchased debt ledger (PDL) transaction in Australian history and our financial capacity to secure timely completely of the opportunity,” he told shareholders this morning.
Credit Corp recently renovated its offices in Washington state to accommodate 700 staff in anticipation of more work in the United States.
“Our tightly integrated US platform has the operational effectiveness and infrastructure required to achieve, and surpass, our medium-term objective of $200 million in annual US purchased debt ledger investment,” Mr Beregi added.
Credit Corp said the US business doubled net after tax profit to $17.7 million in the year to June.
“The US debt buying business was the biggest single contributor to earnings growth in 2021. Operational improvement combined with several years of elevated purchasing and a strong consumer position to produce a 26% increase in collections,” directors said.
“To offset a temporary contraction in market sale volumes arising from COVID stimulus and forbearance the Company grew share across its diverse range of purchasing relationships, completing acquisitions from three new credit issuers during the year.”
