Radio Rentals profiteers off economic crisis, posts huge profit growth

By Patrick Avenell

RR Australia, which trades as Radio Rentals and Rentlo, has posted a very strong six month report on revenue and profit to the Australian Securities Exchange (ASX). Managing director John Hughes attributed the performance to the company’s ability to generate continuing revenue streams, despite the economic crisis.

For the six months ending 30 September, when compared to the same period last year, Radio Rentals’ revenue grew by $4.1 million, or 6.8 per cent, to $63.3 million. This equates to a per customer revenue figure of $127.57, which is slightly up on last year.

Gross profit grew too, by 9.7 per cent, to $38.8 million. Earnings before interest and tax is up 28.4 per cent to $8.7 million and net profit after tax is $5.8 million, up $1.3 million, or 28.6 per cent.

“We are obviously very pleased to announce such a positive result, particularly at a time when other businesses are being so heavily impacted by the current economic conditions,” said Hughes. “The underlying strength of our recurring revenue streams, which are generated by a substantial customer base, places the Company in quite a unique position to withstand a market downturn.”

Radio Rentals and Rentlo generate much of their revenue streams through weekly rental payments on appliances, included white and browngoods. Due to this business model, they do not rely on consumers making big ticket, considered purchases for their revenue.

The worse the economic crisis gets, the more the group could benefit, as customers looking to tighten their discretionary spending, but still want the latest appliances, turn to renting. Discussing this directly, Hughes said, “…tougher market conditions could work in our favour.”

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