Shares in Radio Rentals owner Thorn Group have slumped after it said expansion plans and challenging market conditions are likely to cause a drop in full year profit.

Thorn Group on Tuesday posted a net profit of $14 million for the six months to September 30, down two per cent from $14.3 million in the same period in the previous year.

Revenue in the six months to September grew by four per cent from the previous corresponding period to $100.5 million, but spending on expansion of the company’s financial services businesses contributed to the profit fall.

Thorn also owns personal lender Cash First, business lender Thorn Equipment Finance and debt services company National Credit Management.

“A combination of development and expansion activities along with challenging market conditions have significantly impacted the group’s rate of growth in the first half year and this trend will flow onto the full year result,” the company said in a statement.

Thorn Group shares lost 20 cents, or 10.1 per cent, to close at $1.78.

Earnings in its Radio Rentals business grew by nine per cent in the six months to September, driven by strong growth in furniture.

Demand for televisions continued to fall, and whitegoods rentals were also down.

Despite a lower profit, Thorn Group increased its interim dividend as the board believed the company’s financial performance was likely to improve in the coming years.

Shareholders will receive a fully franked 4.5 cents per share, up from four cents at the same time in the previous year.