Australian foreign exchange group OFX, formerly OzForex, issued a profit warning and replaced its CEO, Richard Kimber, after his new marketing strategy crumbled.
Kimber, a former ANZ Bank executive who has been CEO for only 18 months, is being replaced by Skander Malcolm, a financial services industry veteran, formerly of Westpac and more lately president and CEO, Australia and New Zealand, for GE Capita.
“Richard Kimber has achieved a great deal in setting in place a growth strategy and investing in our technology and people,” says OFX chairman Steven Sargent.
“However, delivery of the strategy has not been to the board’s or shareholders’ expectations.”
The international money transfer company says Brexit, the impending departure of the UK from the European Union, will mean fee and commission income for 2017 will be $3 million lower than anticipated.
In the December quarter, average transaction values declined from individual customers in the UK.
Post Brexit the devaluation of the pound by more than 20% resulted in fewer large value transactions and a 35% decline in revenues per transaction.
And the company’s marketing program has not brought in the rise in revenue expected.
“Due to the ongoing roll-out and refinement of its performance-based marketing program, client additions in Australia during Q3 were below expectations,” the company said in a market update.
“However, these are expected to improve through the remainder of the year as spend is allocated to mediums that generate the highest returns.”
Statutory EBTDA (earnings before taxes, depreciation and amortization) for the full year is now expected to be between $27.5 million and $28.5 million with statutory net profit of $19 million.
“Today’s update on trading is disappointing,” says Sargent.
“While softer market conditions in the UK as a result of Brexit have resulted in lower average transaction values, the revenue uplift from our marketing program in Australia during the third quarter and into January has not been as significant as we had hoped.”
In the latest half year results to September, net profit was down 14% to $9.66 million. Revenue was just 1% higher at $58.63 million.
Its shares closed yesterday at $1.67, down from a 12 month high of $3.15.