Albemarle & Bond Plunges 8%

LONDON -- Shares in Albemarle & Bond (LSE: ABM.L  ) plunged 8% to 272 pence after the pawnbroker warned on profits. The company, which generates around half its earnings from traditional pawnbroking, said profits are expected to be down next year.

For the current year, pre-tax profits were little changed at 21.4 million pounds on revenues that ticked up 15% to 118 million pounds. Gross profits increased by 13% but at the operating level, profits only rose 4%.

Albemarle & Bond, which operates 234 stores, said gold-buying volumes have remained in line with the fourth quarter of last year and margins have stayed above 30%. However, this is below the peak attained in 2012. It added that it does not currently expect any recovery in these trends.

Commenting on the results, chief executive Barry Stevenson said: "The expected downturn in the gold buying market happened very quickly and has set a new level to which we have quickly adapted. We expect gold buying to continue to be a significant profit contributor to the Group albeit at much reduced levels to that achieved at the peak."

However, given that gold contributes around a quarter of total profits, a reduction in gold transactions could impact next year's performance.

The company said: "We expect gold buying volumes and margins to reduce against the exceptional performance in FY 2012. As a result, we expect the Group's profitability, despite the continued maturing of recent openings and mitigating actions management have put in place, to be down for FY 2013."

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David Kuo does not own shares in Albemarle & Bond. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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