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Financial technology firm CAB Payments (LSE:CABP) reported a substantial drop in interim profits on Wednesday, largely due to ongoing foreign exchange headwinds that have impacted earnings.
For the six months ending 30 June, CAB Payments experienced a significant 43% decline in pre-tax profits, which amounted to £13.7 million. Adjusted underlying earnings fell even more sharply, down 53% to £18.7 million. The company’s adjusted EBITDA margins narrowed considerably, dropping from 55.7% to 33.5%. Earnings per share also took a hit, decreasing from 6.1p to 4.0p.
The company reported a 22% decline in gross income, which fell to £55.7 million. However, there was a positive aspect to the report as total transaction volumes increased by 4%, reaching £17.6 billion. This growth in volumes suggests that while the company faced challenges in terms of income and margins, it continued to handle a higher volume of transactions.
Chief Executive Officer Neeraj Kapur commented on the results, noting that despite the tough comparisons with the exceptional performance of the prior year, the company’s results remained resilient. He maintained that the outlook for the company is unchanged from previous updates and highlighted that there was positive trading at the beginning of the second half of the year. Kapur also pointed out that although gross income is projected to be slightly below last year’s figures, the company is seeing good growth across a broader range of currency corridors.
In response to these challenges, CAB Payments unveiled an updated strategy aimed at driving sustainable growth. This new approach focuses on four key areas: network, clients, platform, and investment and innovation. The strategy is designed to create a more diversified business and to support long-term growth.
Following the announcement, CAB Payments' shares fell by 10.42% to 100.32p as of 0925 BST. The decline in share price reflects investor concerns over the ongoing impact of foreign exchange fluctuations and the company's ability to implement its revised strategy effectively. Despite the difficult financial period, CAB Payments remains committed to its strategic goals and to navigating the challenges presented by the current economic environment.
