Latitude Group flags sharp drop in earnings due to cyberattack, shares fall
By Navya Mittal and Himanshi Akhand
(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 cyberattack, 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.
Australia has been roiled by a raft of cyberattacks since late last year, with Latitude ranking among the country’s biggest data thefts.
Data compiled by the government agency Australian Cyber (ACSC) showed 76,000 cyber incidents were reported in the 2022 financial year, a 13% increase from the year before.
Earlier this month, the privacy regulators of Australia and New Zealand began a joint investigation into the company’s practices of handling personal information.
“It’s probably fair to say that Australian authorities have been reactive rather than proactive up to this point,” said Tim Waterer, chief market analyst at KCM Trade.
New account originations and collections were closed or severely restricted for nearly five weeks as the group responded to the cyberattack.
“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.
“Today’s announcement crystalised the impact on the company in terms of the bottom line… in general, when a company all but confirms there won’t be a dividend on the way, this doesn’t tend to go down that well with investors,” Waterer added.
Latitude expects cash net profit after tax (NPAT) in the range of A$5 million to A$10 million ($3.4 million – $6.8 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)