Due to poor trading for Radio Rentals.
At its recent AGM, Thorn Group cautioned shareholders that it expected the profit outlook for the year ending 31 March, 2018 would be subdued and subject to a number of variables. The company has now advised that it expects its half-year profit after tax to be around $11 million and its full year profit after tax to be in the range of $17 to $20 million.
A statement provided to the ASX said, “This guidance primarily reflects a decline in trading conditions in the Radio Rentals division and a poor month of trading in September which has continued into this month. These forecasts represent an approximate 30% reduction from the prior year’s reported performance.
“There continues to be a number of other variables which may have a material financial impact on Thorn’s business and financial performance in the short to medium term. These include the ongoing Australian Securities and Investment Commission investigation into Radio Rentals’ responsible lending practices and the class action launched by Maurice Blackburn.”
Radio Rentals faces weak retail market conditions, delay in returning customers due to the launch of the four year contract three years ago, adverse publicity, and significant operational changes arising from the roll out of the new online origination and credit assessment platform.
“This has resulted in the installation volumes for Radio Rentals for the half-year being 27% down on the same period last year. Corporate expenses are elevated due largely to the cost of administering the regulatory and legal issues facing Radio Rentals as well as the one-off expenses arising from the need to appoint a new CEO
“Thorn Group is implementing revenue and cost initiatives to improve performance and a further update will be provided in the half year results announcement.”