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Why the Cash Converters (ASX:CCV) share price slid lower today

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The Cash Converters International Ltd (ASX: CCV) share price ended the day down 1.8% at 28 cents.

We take a look at Cash Converters’ financial results for the half-year ending 31 December (H1 FY21) below. In particular, what these figures mean for the Cash Converter share price. 

What results did Cash Converters report for H1 FY21?

Today, Cash Converters reported a 31% decline in revenue, to $98.4 million from $142.7 million in H1 FY20.

Statutory net profit after taxes (NPAT) came in at $7.7 million. Which was up from a $19.4 million statutory NPAT loss in the prior corresponding period (pcp).

Operating NPAT declined 28% year-on-year. Cash Converters said its operating results “are presented net of the significant expense items directly associated with the settlement of class action litigation claims in the previous corresponding period”.

For the same reason, statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) was $24.6 million. This was up compared to a negative $12.6 million in H1 FY20. Additionally, operating EBITDA declined 19% year-on-year from $30.4 million.

Moreover, the company’s online presence looks to have benefited from a wider shift in consumer online spending growth. Cash Converters reported a 39% boost in online retail sales, up 39%.

Gross bad debt expenses were cut by 56% and operating cash flow was up at $8.6 million from negative $15.5 million in the corresponding half year.

Cash Converters reported $91.3 million in cash and equivalents as at 31 December, up from $59.4 million.

Management Commentary

Commenting on the results, Cash Converters’ managing director, Sam Budiselik said:

The performance of our underlying business has been extremely impressive considering the substantial impact of COVID-19 throughout the first half of FY 2021. The ongoing Government stimulus had resulted in our inventory levels depleting throughout our store network, our Loan Books contracting and franchise fee revenue reducing as various state-wide (and international) lockdowns occurred throughout the period.

Despite these headwinds the resilience of our business model continued to demonstrate the appeal of our store service experience and the reach of our online and digital assets.

Cash Converters noted it was not eligible for and made no direct claims under the government’s  JobKeeper allowances.

Cash Converters share price snapshot

Despite tumbling 50% during the viral market rout last February and March, Cash Converters’ shares are up 38% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) is up just under 5%.

Year-to-date the Cash Converters share price is up 19.5%.

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Motley Fool contributor Bernd Struben 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.

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