Cash Converters makes profit, sales plunge
Cash Converters CEO Mark Reid has turned around a $5.3 million net loss from FY16, booking a $20.6 million profit after tax for the year ended 30 June, but sliding sales have left the company indicating continued weakness through the first half of fiscal 18.
The company’s ability to hit the lower end of its profit guidance was Reid’s first point to the market on Monday morning, as he booked an otherwise negative 12.4 per cent decrease in revenue to $271.5 million and a 4.1 per cent slide in earnings before interest, tax, depreciation and amortisation to $45.7 million.
A 13.8 per cent decrease in short-term contract lending (SACC) in the first half and a $6 million EBITDA decrease from its corporate store network hampered performance.
Repeatedly describing the year as transitional, Cash Converters said it expects strategic initiatives put in place through the last 12-18 months to begin flowing through by 2H18, expecting a material pick-up in performance that it says underpins their “confidence” in the future growth of the company.
Through the year management has introduced new medium-amount-credit contracts (MACC), which established a loan book valued at $13.4 million and has invested in its online channel, with digital sales increasing 16.3 per cent year-on-year.
“It is pleasing to report a solid NPAT result, we are seeing encouraging signs that the strategy we are implementing is having the desired effect of improving the quality of our loan book and building a sustainable platform for long-term profitable growth,” Reid said.
Continued investment in its Green Light Auto Business, which has grown more than 50 per cent in the last six months as losses from the operation thin, is expected to drive material improvement through FY18, coupled with improvement in operational efficiency and cost control.
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