S&U grows revenues despite consumer caution

HOME and auto credit firm S&U has said its revenues and profitability continue to increase despite consumers remaining cautious on their spending.

In the period February 1 to May 12, the Solihull based firm said revenues in its Home Credit division increased 2% compared with the same period last year.

Customer numbers are similarly higher and the firm said collections remained satisfactory, increasing by 1% against a slightly lower level of book debt as the firm’s loan profile continued to shorten.  

In an interim management statement ahead of its AGM, the group said: “In uncertain times, our Loansathome4u customers gravitate towards our products giving them more frequent access to finance and thus sensibly limiting their overall commitment.  

“This has resulted in an overall improved impairment performance and, equally important, has seen credit availability for our customers at a record level for this time of year.”

The firm’s Advantage brand, its motor finance business, continues to be strong being ahead of both budget and its performance this time last year.

Transaction volumes are 5% above budget while collections, both with new customers and across the whole loan book, remain good.

“Revenues are above budget whilst impairment charges only marginally exceed last year – testimony to Advantage’s ever stronger debt quality.  As a result, the company is cash generative even as volumes increase,” adds the statement.

S&U’s financial position is strengthening. Since the year end, group borrowings have been reduced to £20.2m, compared with £26.1m in May last year and cash generated has helped fund motor finance growth. It also covered £2.6m of dividend and corporation tax payments made in the first quarter.

In outlook, it said that despite the continuing economic uncertainty its strong customer relationships and “conservative but challenging” business strategy would see trading in line with expectations.  
 
Anthony Coombs, S&U chairman, said: “S&U has once again demonstrated that resilience and responsibility in uncertain times bring their own reward.  The company’s current performance and outlook for the year ahead, justifies my cautious optimism.”
 
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