Presentation of Intrum’s results for July-September 2022
Intrum announced its interim results for July-September 2022 on 27 October at 7:00 a.m. CET. The report was presented in an audiocast with teleconference at 9:00 a.m. CET the same day.
Comment by Acting President & CEO Andrés Rubio
“In my first couple of months as Acting President & CEO, I have witnessed first-hand the important work Intrum does in helping consumers and companies get back on track and regain control of their finances. In 2022 we helped circa 2.5 M European consumers to fulfil their obligations and become debt free with Intrum. This singular and sustainable purpose, to help our clients recover on late payments while treating their customers fairly and ethically - is core to the Intrum culture and our greatest motivating force.
In the third quarter, Intrum continued to demonstrate financial resilience and performance, growing cash revenues by 9 per cent and cash EBITDA by 4 per cent compared to the third quarter of 2021, with all three segments contributing positively.
The quarter was again impacted by significant currency movements, with SEK in particular depreciating by 6 per cent vs. EUR since the beginning of the year. While this has on average positively impacted the P&L as circa 70 per cent of our revenues are EUR denominated, our leverage ratio has been negatively affected due to a higher value of EUR denominated debt as of the balance sheet date. At constant Q2 ‘22 currency the leverage ratio reduces to 3.9x. Liquidity remains very strong at SEK 17.3 bn.
We continue to work towards achieving all our medium-term financial targets, including our leverage target, with the clear aim to achieve a leverage ratio of 3.5x as soon as possible.
The ONE Intrum transformation program is progressing well with volumes in the global footprint continuing to build. I have validated the expected recurring benefits of the program to be at least SEK 1 bn and I am confident that this program will allow us to balance our global scale and local market knowledge, to ensure that we offer our clients the best possible solutions. I will provide a full update on ONE Intrum in the first quarter of 2023.
In Credit Management Services, we continued to see increases in lower balance, lower commission invoice claims with associated increasing collections also driving costs during the quarter. However, in revenue terms this underlying growth has been mostly offset by lower inflows of higher value, higher commission financial services claims relative to pre-pandemic volumes. We expect to see increased inflows of financial services claims largely into 2023 based on the current challenging macroeconomic environment and associated increases in consumer credit in general and Stage-2 loans in particular. Cash revenues increased by 5 per cent to SEK 1,042 M compared to Q3 ‘21, while cash EBITDA and cash EBIT each decreased by 13 per cent due to higher operating expenses in the segment. Cash RoIC was 6.9 per cent (8.3).
Strategic Markets continued its strong performance trajectory again in the third quarter with significant improvements across all cash metrics compared to Q3 ‘21. Cash revenues at SEK 1,412 M were 22 per cent above the third quarter of 2021, while cash EBITDA and cash EBIT both increased by 45 per cent to SEK 718 M and SEK 699 M respectively. Cash RoIC was 18.6 per cent (12.4).
In Portfolio Investments, we continued to collect above the active forecast with an index of 106% in the quarter. Cash RoIC was 9.6 per cent (9.9). This is consistent with the eventual gradual normalisation in outperformance compared to active forecast that we have communicated since early 2022. In the context of an increasingly challenging macroeconomic backdrop we are starting to see higher yields for new portfolio purchases, also reflecting an increasing cost of risk. As such, in Q3 ’22 we saw new portfolio investments of SEK 1,335 M (1,633) at a MoM multiple of 2.30 and IRR of circa 15 per cent for the quarter.
Looking ahead, we expect a seasonally strong fourth quarter despite the more challenging macroeconomic environment. Intrum has a resilient business model with servicing in particular benefiting from increasing demand for our services in due course. In Portfolio Investments we expect a more moderate investment pace in the fourth quarter as we selectively deploy capital.
In a turbulent economic environment, Intrum’s role is more important than ever. As Europe’s leading credit management services company, we continue to play a central part in securing a more effective and fair financial value chain, for our clients, customers and society at large.”