- Record annual profit tops £10 million
- Cost pressures to impact 2024 profit
- Dividend up 16% in move to progressive growth
Shares in pawnbroker and jewellery retailer Ramsdens (RFX:AIM) fell 5% on Monday after the company flagged increased energy and staff costs amid continued macroeconomic challenges facing consumers.
The shares have lost around 6% over the past year and are sit 20% below the highs achieved last summer compared with a flat performance for the FTSE-All Share index.
The disappointing outlook took the shine off a record year for the diversified financial services group, which saw pre-tax profit reach a record £10.3 million for the year to 30 September 2023.
WHY THE SHARES ARE DOWN
The headline profit numbers were reported in early October, and while the firm revealed stronger than expected revenue growth of 27% to £83.8 million investors focused on the subdued outlook.
The company highlighted cost headwinds likely to impact trading in 2024 including a £0.4 million increase from energy costs as the group’s fixed pricing ends in February.
In addition, the 10% increase in the national living wage announced by the government in the Autumn statement is expected to impact the business.
It isn’t all bad news though as the group said ongoing economic uncertainty is expected to benefit the gold price which ‘should remain higher than long term averages.’
The group also expects to continue to benefit from customer demand for small loans with the pawnbroking loan book growing 20% in 2023 with ‘built-up latent interest to come through in 2024.’
BOUNCE-BACK IN HOLIDAY SPENDING
Meanwhile, the company said it was hopeful travel numbers and holiday durations in the summer would continue back to 2019 levels. The firm’s recently-launched Ramsdens Mastercard Multi Currency card is expected to support efforts to capture a greater share of customers’ holiday spending.
The full year dividend was increased by 16% to 10.4p per share, representing around 42% of earnings per share. The company said its long-term strategy is to move towards distributing around 50% of earnings to shareholders subject to growth opportunities.
At the current price the trailing dividend yield is around 5%.
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