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Steadfast update shows business holding up despite virus

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The latest update from Steadfast Group indicates business at Australia’s biggest brokerage has so far performed according to its pre-virus expectations.

Steadfast dropped its earnings guidance for this financial year because of the uncertainties caused by the pandemic, but the trading update it released last week shows pre-tax earnings in April are holding up.

Earnings before interest, tax and amortisation (EBITA) in April, which represents the first full month of COVID-19 restrictions, are in line with the forecast it made before the virus broke out in March.

“EBITA for the 10 months to April remains strong at 21.8% ahead of the same period last year,” the update said. “Premium rates continue to rise, with some small volume reductions in our equity brokers, offset by expense savings.”

Its Steadfast Underwriting Agencies arm continues to outperform with strong organic growth, it says.

The April business update is a first for Steadfast, which did not provide a monthly report until the virus crisis erupted in March. The broker has since announced it will keep investors informed of its trading performance after withdrawing its earnings guidance for this financial year.

Steadfast adds there has been no adverse impact on its working capital position. The business also has an unutilised corporate debt facility of $180 million available to draw on if needed.

The deferred premium offer from some insurers has seen a very low take-up from clients, Steadfast said.

Before the pandemic broke out, Steadfast forecast an underlying net profit after tax of $100-110 million and EBITA of $215-225 million for this financial year.

The business made $53.2 million in underlying net profit after tax and EBITA of $108.9 million in the December half.