Cash Converters International Limited reported robust FY25 results, driven by strategic franchise acquisitions and a shift to longer-term, lower-cost lending products. The company is poised for further growth with new loan launches and luxury retail expansion.
- FY25 operating NPAT up 20% to $25.1 million
- Exit from payday and vehicle loans, launch of new ‘Cashies Loan’ product
- Expansion of franchise store network in Australia, UK, and Europe
- Strong balance sheet with $73.2 million cash and secured UK funding
- Consistent fully franked dividends and focus on sustainable shareholder returns
Strategic Transformation Driving Profit Growth
Cash Converters International Limited (ASX – CCV) has delivered a strong financial performance for FY25, underscoring the success of its ongoing strategic transformation. The company reported a 20% increase in operating net profit after tax (NPAT) to $25.1 million, supported by a modest revenue rise to $385.3 million and a significant improvement in earnings per share to 3.9 cents. This growth reflects a deliberate shift away from higher-risk payday and vehicle loans towards longer-term, lower-cost lending products that better serve its customer base.
Central to this transformation is the launch of the new ‘Cashies Loan’ product, designed to offer more responsible credit solutions. This move aligns with Cash Converters’ commitment to reducing loss rates, which have improved to 16% from 17.5% the previous year, and lowering the cost to serve customers. The company’s proprietary machine learning credit models have processed over 500,000 applications in Australia alone, enhancing credit decision accuracy and supporting sustainable loan book growth.
Expanding Global Footprint Through Franchise Acquisitions
Cash Converters continues to expand its global retail footprint, now operating 659 stores across 15 countries. The FY25 results highlight the acquisition of 96 franchise stores since FY21, with a focus on Australia, the United Kingdom, and Europe. This expansion strategy is complemented by the rollout of new smaller-format luxury-only stores, which have demonstrated strong performance and higher margins, particularly in metropolitan areas like Bondi.
The company’s store operations segment showed robust growth, with revenue increasing 8% to $161.4 million and operating EBITDA rising 29% to $31.3 million. Franchise acquisitions have not only increased inventory and goodwill on the balance sheet but also contributed to improved operating leverage and profitability. The UK segment, supported by a £12 million Lloyds facility, has become a growing profit contributor, reflecting successful integration and trading momentum.
Financial Strength and Shareholder Returns
Cash Converters maintains a strong balance sheet with $73.2 million in cash and equivalents, up 30% from the prior year, and undrawn securitisation facilities totaling $81 million. The company’s net tangible asset per share rose slightly to 28.8 cents, reflecting increased inventory values and lower borrowings. This financial flexibility supports ongoing store acquisitions and loan book growth initiatives.
Shareholders have benefited from consistent returns, with the company declaring its tenth consecutive half-year dividend of 1 cent per share, fully franked, culminating in a 2.0 cent annual dividend yield of 7.1%. The company emphasizes disciplined capital allocation and a focus on cash NPAT growth to sustain dividends and build long-term value.
Looking Ahead – Growth and Innovation
Looking forward to FY26, Cash Converters plans to scale its new loan products, continue targeted franchise acquisitions, and expand its luxury retail formats across metro locations. The company is exploring lower-cost funding options in Australia to complement its UK bank facility, aiming to optimize capital efficiency. With a diversified business model combining lending and repurposed retail, supported by advanced AI-driven credit and authentication technologies, Cash Converters is well-positioned to capitalize on market opportunities while championing the circular economy.
As regulatory changes reshape the consumer finance landscape, Cash Converters’ strategic pivot towards responsible lending and retail innovation may serve as a blueprint for sustainable growth in the sector.
Bottom Line?
Cash Converters’ FY25 results mark a pivotal step in its evolution, setting the stage for accelerated growth through innovation and global expansion.
Questions in the middle?
- How will the new ‘Cashies Loan’ product perform in a competitive lending market?
- What impact will the exit from payday and vehicle loans have on long-term loan book growth?
- Can Cash Converters sustain its dividend policy amid ongoing store acquisitions and funding initiatives?