Australian global education provider Navitas has posted a sound but slower interim profit, due to challenges in markets in Australia and the UK. In the first half of the financial year, net profit climbed 9% to AUS$35million compared with 18% last year. Group revenue climbed 17% to AUS$341.8m.
“Despite well documented external impacts in several key markets, we are reporting earnings growth though at a slower pace than in previous years,” stated Rod Jones, the company’s CEO.
Growth predominantly came from strong demand for Navitas’ Canadian, Singaporean and US university degree and pathway programmes.
However, earnings fell in its Australian and UK university programmes primarily due to the impact of changes to student visa policy in both markets (with enrolment across both falling 9.2% in the third semester of 2011). Its Australian English Division was also affected.
In a statement, Navitas said it was adjusting to the changes in both markets, and encouraged by moves to ease student immigration rules in Australia which generates the bulk of its business.
earnings fell in its Australian and UK university programmes primarily due to the impact of changes to student visa policy
“With some of Knight’s recommendations being implemented before the end of 2011, we are now working with our partner universities and the government to ensure the key remaining recommendations are in place for Navitas operations by the original mid-2012 target,” Jones said.
“Accordingly we anticipate improvement in new enrolments to emerge in financial year 2013.”
Despite the slowdown, Navitas expanded in 2011 and 2012 with two new colleges in Scotland and a joint venture with Birmingham City University.
Last month, Australian private equity fund Hyperion Asset Management lifted its stake in the company from 5.2% to 6.4%. The fund was said to be confident about Navitas’ US expansion plans and the Australian market’s power to rebound.
“Compared to a few years ago, it’s more expensive for international students to come to Australia but relative to other major regions like the US, Britain and Canada, it’s still attractive from both a price and security point of view,” Hyperion senior portfolio manager Joel Gray told Deal Journal Australia.
Navitas said Australia generated about 78% of its business, the UK 6%, Asia 5%, North America 5%, with the rest from other regions. The company’s full end-of-year profits in 2011 were $77.4m, up 20% on 2010.
