Mortgage Choice is losing market share as profit falls 80pc
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Mortgage Choice, under attack and losing market share, today posted a 81 per cent drop in full-year profit to $4.2 million.
Revenue at the mortgage broker was up 9 per cent to $217.8 million.
After initially falling to $1.67, the shares recovered to be 3 per cent ahead at $1.76 by the close. The business is valued about $212 million.
An investigation by Fairfax Media and ABC’s 7.30 in June reported that franchisees had been financially devastated after signing up to the high profile brand.
Chief Susan Mitchell says Mortgage Choice is losing market share.
“Net profit in the broking business grew 4 per cent and the financial planning business continues to grow and perform well,” she says.
“However, despite the strength of our brand and customer offering, settlements in FY2018 declined in a flat market, and we are not growing our franchisee numbers.
“Through a thorough consultation process with franchisees it became very clear we needed a more competitive remuneration structure and needed to adjust the way we deliver our services, so that we can grow our network and market share.
“The new hybrid broker remuneration model will provide franchisees with higher pay and reduce their income volatility, enabling them to invest in their businesses while attracting new, high quality brokers.”
Mortgage Choice expects 2019 cash net profit after tax to be $16.5 million, down from $23.4 million in 2018. It has 449 mortgage franchises.
The company declared a fully franked final dividend of 9c a share, bringing the full-year shareholder pay-out to 18c a share.
The 2018 results in detail: