Home credit and motor finance specialist S & U PLC (LSE: SUS) said it was trading in line with market expectations for the full year to the end of January as both of its businesses performed well and continued generating cash.
The group’s home credit operations have been performing in line with expectations as debt quality and impairment levels are improving. The division currently accounts for two thirds of S&U’s profits.
Debt quality has also improved at the group’s motor finance business Advantage, where trading performance has also been in line with budget, reflecting a 5% increase in Live accounts compared to last year. Just like the home credit business, Advantage has been generating cash “strongly", driven by collection rates as the levels of customer early redemption decline.
The group said it was looking to capitalise on the opportunities that arose as a result of the recent industry consolidation.
“Whilst we take nothing for granted, we are confident of being able to deliver a sustainable improvement in trading performance both in the current year and early in the new decade,” said Chairman of S & U, Anthony Coombs.
S&U's balance sheet has improved as net borrowings fell by £6 million to approximately £27 million from £33 million a year ago, reflecting the continuing cash generation by the group’s businesses. The group said it had significant headroom within existing facilities for both organic expansion and acquisitions.
Shares in S & U added 2.5% on the update this morning.