Credit Corp was on form in FY 2021…
The post Credit Corp (ASX:CCP) share price charges 6% higher after strong FY 2021 result appeared first on The Motley Fool Australia. –
At the time of writing, the receivables management company’s shares are up 6% to $30.21.
Credit Corp share price up 6% after achieving FY 2021 guidance
FY 2021 net profit after tax increased 11% increase in net profit after tax to $88.1 million.
US-based net profit after tax doubled to $17.7 million.
Near record purchased debt ledger (PDL) investment outlay of $293 million.
Record second half gross lending volume of $105 million and record committed FY 2022 starting PDL investment pipeline of $150 million.
Final dividend of 36 cents per share, bringing its full year dividend to 72 cents per share.
What were the drivers of this result?
According to the release, Credit Corp overcame challenging market conditions across all segments to deliver a profit after tax in line with its guidance of $85 million to $90 million.
A key driver of this was its ANZ PDL collections, which came in within 4% of FY 2020’s stimulus-induced result. This was achieved with limited organic purchasing as a consequence of reduced PDL supply arising from the temporary impact of COVID stimulus and forbearance on charge off volumes.
The result was also boosted by the acquisition of the Collection House PDL book. This helped drive improvements in segment productivity and earnings.
What did management say?
Credit Corp’s CEO, Thomas Beregi, was pleased with the company’s performance and the success of its Collection House PDL book acquisition.
In respect to the latter, he said: “We used our analytical ability to provide a great price, our operational capability to promptly integrate and uplift collections from the largest individual PDL transaction in Australian history and our financial capacity to secure timely completion of the opportunity.”
Mr Beregi also spoke positively about its US operations and believes they will be a key driver of future earnings growth.
“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 PDL investment,” he said.
Also giving the Credit Corp share price a boost today is management’s commentary on the year ahead. It notes that it enters FY 2022 with considerable momentum, having invested heavily during FY 2021.
As a result, it is guiding to net profit after tax of $85 million to $95 million. This represents a 3.5% decline to 7.8% increase on FY 2021’s net profit of $88.1 million.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.