Cabcharge profit up 28.5% but shares fall
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Cabcharge has delivered a big lift in first half profit but its shares tumbled as the results were below under market expectations.
The company delivered a net profit for the six months to December 31 of $33.34 million, up 28.5 per cent from the $25.94 million in the previous corresponding period.
The taxi charge card provider increased its first half revenue by 1.2 per cent to $99.8 million.
But the result still came in below analysts' expectations of a $42.7 million profit and Cabcharge's shares subsequently fell 35 cents, or 6.82 per cent, to $4.78 on Thursday.
Chairman Reg Kermode said that turnover from taxi payments and Cabcharge accounts dropped turning the half but that turnover from bank issued cards increased.
He said economic conditions in some parts of the country, combined with corporate and government cost-cutting were affecting the business.
"We are working to protect our market share and provide a platform for growth when conditions improve," Mr Kermode said.
The company's focus on broadening its Cabcharge product range was paying off with a 15 per cent increase in gift card sales for the calendar year, compared to the previous year.
Mr Kermode said Cabcharge had proven its resilience during the global financial crisis and was confident it could build longer-term growth.
"We remain cautiously confident about the prospects for our growth in the longer term, based on our technology, product innovation and diversification," he said.
"While economic conditions obviously impact our business, we are well positioned as demonstrated by our performance throughout the GFC."
Mr Kermode said he did not believe Cabcharge would be affected by the Reserve Bank of Australia's (RBA) revised surcharging standards that limits surcharges to the reasonable cost of card acceptance.
"Our fee is a service fee, not a surcharge," he said.
IG Markets analyst Stan Shamu said it was still uncertain whether the RBA's revised surcharging standards would affect Cabcharge.
"There's a little bit of confidence taken out of the stock in the market," he said.
He said the disappointing result, the taxi payment turnover decline and the weak economic conditions caused Cabcharge's shares to fall.
"In terms of outlook, they haven't really given much guidance.
"I think with economic conditions the way they are and their continual struggle with market share, I think a lot of investors are a little bit sceptical of the company at the moment," he said.
Cabcharge will pay shareholders a fully franked dividend of 18 cents a share on April 30.