Why is Credit Corp (ASX:CCP) making headlines today?

Highlights:

• Credit Corp Group has shared its financial report for FY2022 today after which shares witnessed a plunge of more than 14%.
• The company has reported 9% rise in net profit after tax (NPAT), 16% increase in US segment NPAT.
• Credit Corp will be paying a final dividend of 36 cents per share for FY2022. This represents a full year payout ratio of 52% for FY2022.
• In FY2023, Credit Corp expects to make AU$90-97 million in NPAT.

Shares of ASX-listed diversified financials company, Credit Corp Group Limited (ASX:CCP) were spotted trading 13.69% lower at AU$20.85 per share at 10:05 AM AEST today (2 August 2022) after the company shared its full-year results for 2022 (FY22) and guidance for FY23.

Although net profit after tax (NPAT) increased in FY22, the company stated that US purchased debt ledgers were 80% higher than the last year corresponding period.

Key financial highlights from FY22 

• NPAT increased 9% to AU$96.2 million within a year.
• NPAT surged by 16% in the US segment.
• PDL outlay in the US market increased by 80% on a prior corresponding period (pcp) basis.
• Revenue increased to AU$411.2 million, up by 10% on pcp.
• Income generating assets grew by 39% on pcp to AU$835.7 million.
• Pre-tax operating cash flow improved by 2% on pcp to AU$420.6 million.
• Collections grew by 18% during the year, but the growth was not in line with the company’s investment.

Credit Corp said the performance during the year was adversely affected by the limited US workforce in the challenging labour market. Reportedly, the company has undertaken various initiatives to fill this gap.

How much dividend has been announced by Credit Corp?

Credit Corp announced a final dividend of 36 cents per share for FY22, taking the full-year dividend to 72 cents per share.

The full-year dividend is 3% higher than the previous year.

Guidance shared by Credit Corp

Image source: © Starfotograf | Megapixl.com

While sharing the guidance for FY23, the company has considered that the issue of US workforce constraints would not be recovered soon, and no significant recovery in PDL sales volume in Australia and New Zealand would be observed.

Credit Corp said that it started FY23 with a solid investment pipeline and is expected to generate substantial free cash flow.

According to today’s release, the expected NPAT is AU$90 to AU$97 million. Expected earnings per share (EPS) is 133 to 143 cents. Expected PDL acquisition is AU$220 million to AU$260 million and estimated net lending volumes are AU$50 million to AU$60 million.

What is Credit Corp doing to ensure long-term growth?

Via today’s ASX announcement, the company informed the market that it had relaunched its auto loan offering, which is expected to take the gross loan book to AU$34 million, almost doubling over the years.

The pilots have begun for US lending and buy now pay later. In addition to this, new products have also reached the last stage of development. It is estimated that the pilots will commence in FY23.