Baycorp Remains Upbeat Amid Downturn

by Mike Bevel, CollectionIndustry.com

Playing the Pollyanna Glad Game, and turning their frowns upside down, Baycorp remains upbeat despite a sagging New Zealand economy.

Chief executive officer Andrew Want reiterated the company’s August guidance for earnings before interest and tax (EBIT) between $53 million and $58 million in 2006/07.

Last year’s EBIT was $58.8 million, but the company now has a lower earnings base following the $96.5 million sale in June of its debt collection business.

?In terms of continuing operations, (the forecast) is a significant uplift on last year,” Mr Want told journalists after the company’s annual general meeting in Sydney.

Baycorp’s exposure to New Zealand is significant at 25 to 30 per cent of group earnings, albeit substantially less than last year.

“When we had the debt collection business we were essentially 50 per cent New Zealand, 50 per cent Australian, so we’re now much more heavily weighted to the Australian side,” Mr Want said.

Nevertheless, he said Baycorp would aim to change existing products and create new ones to adapt.

“It’s complicated somewhat by the fact that we’re in the middle of this major rebuild program, so we have in effect the technology lock down,” he added.

The program involves the integration of all Baycorp’s credit bureaus onto one upgraded platform.

As for Baycorp’s Australian operations, Mr Want repeated that growth in business credit will partly offset slowing growth in consumer credit.

“There’s a variety of (debt) consolidation activity that’s happening and that’s continuing to drive activity through the credit bureau, so that is going some way to offsetting the rate of slowdown in the rate of growth in consumer credit,” he said.

“But at the same time business investment is continuing pretty strongly, so there’s growth there too.”