Provident Financial share price falls 72 per cent: Woodford-backed firm warns again on profits and chief exec quits

 
Oliver Gill
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Provident Financial has a workforce of thousands of doorstep sales personnel (Source: Getty)

Provident Financial shares were in freefall today, falling 72 per cent after the firm announced it had been hit by another profit warning.

And as business spirals downwards, chief executive Peter Crook stepped down with immediate effect.

Over £1.5bn was wiped off the Neil Woodford-backed firm's market capitalisation in a matter of minutes as the markets opened. During the course of trading this morning, that increased to £2.2bn.

The firm has been struggling to collect debts, admitting this morning current collections performance is running at 57 per cent, compared with 90 per cent posted in 2016.

The FTSE 100 firm said the "extent of this underperformance and the elongated period of time required to return the performance of the business to acceptable levels invalidates previous guidance".

Provident Financial recut its numbers and is forecasting a pre-exceptional loss of between £80m and £120m.

Read more: Provident Financial has now had £1.6bn wiped off its shares since May

Executive chairman Manjit Wolstenholme said: "I am very disappointed to have to announce the rapid deterioration in the outlook for the home credit business.

"Protecting the group's capital base through withdrawing the interim dividend and in all likelihood the full-year dividend is the appropriate response to maintain the highly valuable franchises of Vanquis Bank, Moneybarn and Satsuma. My immediate priority is to lead the turnaround of the home credit business."

The Bradford-based lender launched an operational shake-up earlier this year. But disheartened staff are reported to be less than enthused with job changes and cuts. Analysts have suggested employees may no longer be bothering to chase overdue debts.

In a statement, Woodford said this afternoon: “I believe it is critically important to maintain a disciplined, fundamentally-based perspective in my investment analysis.

“Assuming some stabilisation in the consumer credit division with a smaller customer base, along with other conservatively-struck assumptions about the rest of the business, the group should deliver pre-tax profit in excess of £300m in 2019."

Read more: Over half a billion pounds wiped off Provident Financial market cap

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