Cash Converters International Limited reported a robust 41% increase in net profit for FY2025, driven by strategic franchise acquisitions and a shift in loan product mix. The company declared a fully franked final dividend and maintains a strong balance sheet as it navigates evolving regulatory and market conditions.
- 41% rise in net profit after tax to $24.5 million
- Stable revenue of $385.3 million despite 15% loan book reduction
- Acquisition of 20 franchise stores in Australia and the UK
- Shift away from payday loans towards medium-term and line of credit products
- Final fully franked dividend of 1.00 cent per share declared
Strong Financial Performance
Cash Converters International Limited has delivered a standout financial year for FY2025, with net profit after tax soaring 41% to $24.483 million. This impressive growth was achieved on stable revenue of $385.3 million, reflecting the company’s ability to balance a strategic repositioning of its loan portfolio with robust retail operations.
Strategic Store Acquisitions Drive Expansion
The company continued its deliberate strategy of acquiring franchised stores, converting 20 franchise outlets into company-owned stores across Australia and the United Kingdom. These acquisitions, including groups such as Aram, Mt Druitt, Rayner, Rumline, and Thomson, have expanded Cash Converters’ footprint and contributed positively to earnings. The Australian corporate store network now totals 86 stores, with further acquisitions underway.
Loan Book Transition and Product Innovation
Cash Converters has been actively reshaping its loan book, reducing exposure to higher-cost payday loans (SACC) which now represent just 15% of the portfolio. Instead, the company is focusing on medium amount credit contracts and a growing Line of Credit product, which recorded a 58% increase in loan book size. This transition supports a more sustainable lending model with improved net loss rates, which fell from 17.5% to 16.0% year-on-year.
Balance Sheet Strength and Dividend Policy
The Group’s balance sheet remains solid, closing the year with $73.2 million in cash and $75 million of undrawn capacity under its securitisation facility. The Board declared a fully franked final dividend of 1.00 cent per share, marking the tenth consecutive half-yearly dividend at this level. The Dividend Reinvestment Plan remains suspended, reflecting a cautious capital management approach amid ongoing market uncertainties.
Governance, Risk, and Regulatory Compliance
Cash Converters continues to invest in cyber security and is proactively preparing for mandatory climate-related financial disclosures under the new AASB S2 standards. The company maintains a strong governance framework, with no goodwill impairments recorded in FY2025, contrasting with a $3.3 million impairment in the prior year related to New Zealand operations. The Group’s risk management practices emphasize responsible lending and compliance with evolving regulatory requirements across its operating jurisdictions.
Outlook
Looking ahead, Cash Converters is well positioned to capitalize on its growing store network and evolving loan products. The company’s focus on disciplined franchise acquisitions and technology-driven credit risk management bodes well for sustained earnings growth. However, the transition away from payday lending and the integration of new acquisitions will require careful execution in a competitive and regulated environment.
Bottom Line?
Cash Converters’ strategic acquisitions and loan book repositioning have set the stage for continued growth, but investors will watch closely how regulatory changes and market dynamics shape the next chapter.
Questions in the middle?
- How will the exit from payday loans impact loan book growth and profitability in FY2026?
- What is the timeline and expected impact of the company’s climate reporting compliance efforts?
- How will ongoing franchise acquisitions in Australia and the UK affect operational integration and margins?