The Credit Corp Group Ltd (ASX: CCP) share price is having a day to forget, down 14% at the time of writing.
Shares in the S&P/ASX 200 Index (ASX: XJO) debt-focused financial services company closed yesterday trading for $23.60. In late morning trade on Tuesday, shares are swapping hands for $20.32.
ASX 200 investors are pressuring the stock following the release of the company's 2023 financial year results (FY 2023).
Here are the highlights.
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Credit Corp share price dives on profit slide
- Revenue of $473 million, up 15% from FY 2022
- Net profit after tax (NPAT) of $91 million, down 5% from $96 million in FY 2022
- Final fully franked dividend of 47 cents per share (cps) bringing the full-year dividend payout to 70 cps, down 5% year on year
- Net operating (free) cash flow of $54 million as at 30 June
What else happened during the financial year?
The slide in profits that looks to be pressuring the Credit Corp share price today came despite strong earnings growth in the company's lending segment. Credit Corp achieved a 70% year on year growth in its lending segment NPAT.
However, the company said that growth was countered by continued run-off in its core AU/NZ debt buying business and costs arising from increased US resourcing.
Also on the plus side was a 43% increase in Credit Corp's consumer loan book, which reached an all-time high gross closing balance of $358 million.
Thomas Beregi, Credit Corp CEO, said the company managed to achieve that loan book growth while rationing the volume of longer-duration auto loans. "Short durations and appropriate credit settings will contain risk should economic conditions deteriorate," he said.
The company also noted a recovery in its operational performance in the United States in the second half of FY 2023. But potentially pressuring the Credit Corp share price was the acknowledgement that the "final quarter showed that collection conditions may have deteriorated as the company experienced increased repayment plan delinquency".
Commenting on the uncertain conditions in the US, Beregi said, "Continued operational improvement will ensure our competitiveness and support higher levels of future investment."
What's next?
Looking at what could impact the Credit Corp share price in the year ahead, the company said it expects its record starting loan book to produce strong lending segment earnings growth in FY 2024. Management anticipates earnings growth of 4%.
In its FY 2024 guidance, Credit Corp forecast NPAT in the range of $90 million to $100 million. And earnings per share to come in the range of $1.32 to $1.47.
Credit Corp share price snapshot
Despite today's big fall, the Credit Corp share price remains up 10% in 2023.
