Provident Financial mulls sale of Yes Car Credit
Thursday, 15 September 2005
Print
Email
Provident Financial is considering putting its Yes Car Credit business up for sale, after the division slumped to a £6.2m pre-tax loss during the first six months of the year.
Reporting its interim results yesterday, the group said it sustained an overall 1.3 per cent fall in pre-tax profits for the first half of the year, driven principally by the performance at Yes.
Robin Ashton, the group chief executive, said although a new management team had been put in place in the division within the past nine months, the group would consider selling the business if it did not put itself on course to break even again by next year.
Yes specialises in selling second-hand cars along with finance deals to people with poor credit ratings. Mr Ashton said the business had suffered from a sharp fall in sales, driven by increased market competition, and a general slowing in demand in the UK car market.
Excluding Yes - which accounts for almost 20 per cent of Provident's revenues - profits within the group rose 14 per cent for the half, spurred on by a near 80 per cent growth in its international division.
Sales in its core UK home-credit business fell 4 per cent over the period, although profits remained roughly flat.
Mr Ashton said the fall in customer numbers was also largely a result of increased competition in the market, adding that he expected profits to continue to fall over the coming year.
"The [UK home credit] market has become much more competitive over the past few years," he said.
"If you are looking to borrow a small amount of money, such as £200 or £300, the options in terms of overdrafts and credit cards have increased significantly."
In its international business, Mr Ashton said all four of the central European markets it operates in are performing well, while its Mexican business is on track to break even in 2008. He said news of expansion into another market would be revealed early next year.
Shares in the company fell as much as 1.3 per cent yesterday, before rallying 4 per cent to close up 28.5p at 667p.
