Latitude Group forecasts steep drop in 2023 earnings, shares tumble

(Reuters) -Australia’s Latitude Group on Friday forecast a steep fall in fiscal 2023 earnings due to higher credit losses and provisions associated with a recent cyber attack, sending its shares nearly 10% lower.

The company, which provides credit cards and personal loans for some of Australia’s biggest retailers, said in March hackers stole nearly 8 million Australian and New Zealand drivers’ licence numbers.

New account originations and collections were closed or severely restricted for nearly five weeks as the group responded to the cyber attack.

“Latitude had anticipated some normalisation in loss ratios across its portfolio, however the cyber-attack has materially worsened this trend due to lost collections activity,” the group said in a statement.

The consumer finance firm said it expects to recognise about A$53 million after tax in provisions for the first half, adding that the cost does not include the potential for regulatory fines or class actions.

Earlier this month, the privacy regulators of Australia and New Zealand began a joint investigation into the company’s practices of handling personal information.

Latitude expects cash net profit after tax (NPAT) in the range of A$5 million to A$10 million ($3.39 million – $6.78 million) for the half year to June 30, compared with a cash NPAT of A$93 million in the year-earlier period.

It also expects a statutory loss after tax from continuing operations in the range of A$95 million to A$105 million for the half year, compared to a profit of A$30.6 million a year ago.

Full-year cash NPAT is likely to be in the range of A$15 million to A$25 million, with statutory result expected to be a loss, Latitude said, adding that it was unlikely that it would declare a dividend for the six months.

Shares of the company fell as much as 9.7% to A$1.170, hitting their lowest level since March 30.

($1 = 1.4743 Australian dollars)

(Reporting by Himanshi Akhand in Bengaluru; Editing by Subhranshu Sahu)