Cash Converters has boosted its net profit after tax to $22.5 million in fiscal 2018, up 9.1 per cent from last year.
The result was driven by a strong second half, which was up 40.4 per cent on the first half of 2018, driven largely by strong growth in the company’s loan book divisions.
“The turnaround taking place is a direct result of our efforts to enhance customer experience, improve our operational efficiency, broaden our revenue base creating sustainable, long-term shareholder value,” Cash Converters chief executive Mark Reid said.
“We’ve laid the foundation to position the Company for further growth as we look to become Australia’s most trusted personal finance provider and second-hand goods retailer.”
The results coincided with the announcement of Reid’s resignation. Chief operating officer Sam Budiselik has become interim CEO, with the board beginning a search for Reid’s replacement.
Cash Converters chairman Stuart Grimsaw said “Mark has done a terrific job in evaluating the position of the company upon formally taking the role and then successfully moving the company in a direction that is reflected by the current strong financial results.”
The company’s 69 Australian corporate stores saw earnings before interest, tax, depreciation and amortisation (EBITDA) fall 10 per cent from the prior year, hitting $15.8 million.
However, this was buoyed by an increase in online spending, with Cash Converters online sales increasing 12 per cent during the year.
Franchised operations contributed a strong EBITDA growth of 18.2 per cent to $12.4 million, with Cash Converters UK delivering an increase of 84.5 per cent to $3.2 million after having incurred losses during FY15-16.
The company’s New Zealand franchise, of which Cash Converters owns a 25 per cent equity stake, increased its contribution to an EBITDA of $846,000, up from $314,000 the year prior.
Cash Converters saw strong growth across it’s loan book divisions, with 49.7 per cent growth to $172.3 million. The increased revenue momentum was seen in the medium amount credit contract (MACC) loan book year over year, increasing 154.6 per cent to $34 million.
Personal loans and cash advances increased 19.4 per cent to $85.6 million, the largest contributor to the division’s growth, while vehicle financing under the Green Light Auto branding rose 109.3 per cent to $42.1 million.
Driving this growth was the launch of an online loan application website during the FY18 year, resulting in a 30 per cent reducing in monthly online application withdrawals by consumers since launch due to improved assessing turnaround times.
This article first appeared in Inside Retail, a sibling publication to Inside Franchise Business.