Global education service provider Navitas (NVT) posted a weaker than expected full year profit of $80.3 million, down 11% year on year. 

The result was impacted by the closure of two east coast school campuses and changes to US taxes. NVT’s earnings (Pro-forma EBITDA) were in line with revised estimates at $161 million (and market guidance) after the closure of its two properties. 

The closures of the Macquarie City Campus and Curtin University in Sydney, which Navitas ran through its partnership agreements, impacted NVT’s total revenue for FY17. Even with the two Sydney campus closures and increasing international competition in overseas education markets particularly the US & UK, overall student intake lifted by 5% over the year. Overall earnings margin were unchanged at 16.3% with a slight margin improvement in its Careers and Industry division over the year from 14.6% to 16.3%. 

The newly created Careers and Industry division comprising the merged segments of SAE and Professional & English programs saw a lift in total revenue of 2%. The opening of two new campuses in Germany and Canada helped lift revenue with earnings increasing by 13%. NVT’s 2018 full year earnings are expected to fall by $14 million due to a reduction in contracts in its Adult Migrant Education Programs (AMEP) from 1 July 2017. 

Navitas University partnerships saw an 8% lift in new enrolments over the period supported by a 16% lift in Australian college growth and Canadian enrolments also grew. US enrolment were hit by tougher US visa requirements under the new US administration. UK enrolments were also down 3% as the shorter semesters/term made it more difficult to lock in new students. 

University Partnership margins remained stable but were impacted by campus closures and sign on cost from new colleges in the US. Although the brand received a boost from its five renewed contract wins and Western Australian based education faculty Edith Cowan which has now been converted into a new Joint venture. New standardised and enhanced business practises also helped improve overall experiences for students and staff. 

The company is targeting 5% compound annual growth rate (CAGR) by FY20 and 18% growth in EBITDA margin. Navitas said it will pay a second half dividend to shareholders of $0.101 on 15 September 2017.