Australian Debt Buyer Hammered on Stock Market After Earnings Update

Publicly-traded Australian debt purchaser and collector Credit Corp saw its shares plummet in Monday trading in Oz after the company issued an earnings warning early in the day, the second such warning for its 2008 fiscal year.

Sydney-based Credit Corp (ASX: CCP) lowered profit estimates to between $9 million and $10.8 million from the approximate $16 million it had been expecting earlier. In November, the company lowered expectations from $21.6 million to $16 million.

The Australian stock market punished the company’s stock, sending shares down 77 percent to close at $0.82. Credit Corp’s stock hit a 12-month high of $11.72 in July. The company will release its first-half fiscal 2008 results on February 14.

In the guidance update, Credit Corp blamed “relative underperformance of a proportion of the company’s recent debt purchases” on the poor performance, in particular one specific forward flow agreement that the company is moving to terminate. The company also blamed a focus on short-term results rather than long-term success that resulted in misplaced collection efforts on newly-purchased debt.

Credit Corp also announced in the release that its chairman, Christopher Deane, was resigning. Deane has been the chairman since the company went public in 2000. Richard Thomas, a non-executive director of the company since 2006, was named as acting chairman.