Australia education firm Navitas’ profit hit by college closures, US policy
SYDNEY: Australian education provider Navitas Ltd’s first-half net profit halved, hit by college closures at home and a hard-line immigration policy in the United States that spooked student enrolments in the world’s largest education market.
The nation’s largest listed private education company, which provides English proficiency courses for foreign students, warned on Tuesday it now expects a ‘medium term’ downturn in US enrolments as students sign up to study elsewhere.
The downbeat outlook contrasts with past statements that promoted the United States as Navitas’ next growth leg. Its shares slumped almost 10 per cent to a near three-month low.
Net profit for the six-months ended Dec 31 was A$24.7 million (US$20 million), versus A$53.3 million a year ago. That was below a Deutsche Bank estimate of A$34.4 million.
“I was expecting the company to go backwards before it moved forwards, but it was actually a little weaker than I had ,” said Philip Pepe, an analyst at stockbroker Blue Ocean Equities, who had expected A$36.4 million.
Navitas’ revenue was down 4.6 per cent to A$456.7 million and the company booked a one-off A$7.5 million charge after it cut the carrying value of its US assets as a result of tax law changes there.
In Australia, earnings were hit by the loss of lucrative government contracts for teaching migrants English and the closure of two colleges, which although previously flagged bit deeper than the market anticipated.
With operations in Australia, North America and Britain, the West Australian-based company’s international footprint makes it vulnerable to changes in student visa regulations and currency volatility, which can quickly change a country’s attractiveness to foreign students.
During the 2016 presidential race, US President Donald Trump campaigned for “a total and complete shutdown” of Muslims entering the United States.
Since his election tighter enforcement of immigration rules has lifted visa rejection rates for students and Navitas last year reported a 23 per cent drop in enrolments. — Reuters