A strong 2019 provides firm foundations in turbulent conditions
At the time of writing, we are experiencing what is a new and challenging situation for us all due to the spread of Covid-19 – one that will have repercussions for virtually all businesses around the world.
In Europe, countries in the south have been hardest hit by the ongoing virus outbreak, which has affected all aspects of society. Intrum’s Strategic Markets business line is experiencing delays in cash flows due to general restrictions
brought in across countries and reduced activity in legal systems.
The health and safety of Intrum employees is our top priority. Since January, we have taken extensive measures to enable us to conduct business as normally as possible, with working from home being a key aspect of how we are managing the situation. Intrum’s financial position is strong with good liquidity, which is a good starting point given current circumstances.
Intrum entered 2020, after an eventful and momentous 2019. During the year, we took several important steps to further consolidate our market-leading position in Europe. Our integrated business model, that combines Credit Management Services (CMS) with acquisitions of non-performing loan portfolios, enables close co-operation with our clients that in turn enables us to meet their specific needs at different points in time.
We can summarise a strong 2019 with solid underlying results and new record levels of cash collections, while completing as planned the integration work that started in 2017 following the merger.Mikael Ericson, President and CEO
The single most important event during the year was our partnership with Piraeus Bank in Greece, which was announced in June and consolidated
in October. We added 1,300 new colleagues and created a strong platform on which to further build our presence in Greece. In Italy, our partnership
with Intesa Sanpaolo gained momentum and made an important contribution to our growth for the year. The acquisition of Solvia in Spain was finalised in the second quarter, giving us a robust presence on the Spanish market. In combination with taking steps to address our cost base in Spain, the Solvia acquisition gives us reason to expect stable business development in Spain going forward after two challenging years.
We can summarise a strong 2019 with solid underlying results and new record levels of cash collections, while completing as planned the integration work that started in 2017 following the merger. As part of our efforts to integrate and centralise common functions, we also launched a broader efficiency programme that will deliver bottom line improvements totalling some SEK
600M in 2020 and beyond.
New organisational structure reflecting business activity
On January 1st, 2020, we introduced a new organisational structure that better reflects our current operations. Our three large southern European markets, Greece, Italy and Spain, were designated as a new business line, “Strategic Markets”, alongside our existing segments Credit Management Services and Portfolio Investments. We also removed the geographical segmentation of our four regions. These changes are designed to simplify internal reporting and reduce costs. We also believe that these measures will improve external transparency related to the development of our three large south European markets.
Continued progress towards “One Intrum”
Our work on harmonising and centralising our processes, systems and operations continued throughout 2019. Intrum is the leading player in our industry and our extensive presence on 24 markets in Europe means that we have unique opportunities to operate effectively, concertedly and benefit from best practice across the organisation. Our global service centre in Vilnius was expanded during the year, providing us with excellent opportunities to serve our clients, especially major international companies that operate in several of our markets, in more co-ordinated and joined-up ways.
Intrum’s business and culture is characterised by our four values: Empathy, Ethics, Dedication and Solutions. We ensure that these values guide us in
our daily operations and in our work with clients and customers. All employees are taking regular trainings in our Code of Conduct and this year a revised version was launched.
Intrum’s purpose – to lead the way to a sound economy – is at the core of our strategy.Mikael Ericson, President and CEO
This is an important tool for ensuring that our external target groups – not least our clients – experience “One Intrum” irrespective of which country or in what context they come into contact with us. In these challenging times with the spread of Covid-19, our values of Empathy and Ethics are more important than ever; and in this spirit, we have developed additional guidelines to ensure that we are responsive to our customers.
Strong underlying performance growth
We saw strong financial performance during 2019. Adjusted revenues increased by approximately 20 per cent compared to 2018, while adjusted EBIT increased 38 per cent. The Board of Directors proposes an increase in the dividend to SEK 11.00 per share (SEK 9.50). Items affecting comparability
totalled SEK 4.1 billion, of which SEK 2.9 billion was write-downs of our intangible assets in Spain. This adjustment reflects the earnings level observed in recent quarters compared to earlier periods when Spain was characterised by different market conditions. Of the SEK 4.1 billion in total items affecting
comparability, SEK 3.1 billion were non-cash items.
The total value of portfolio investments, including real estate and shares in joint ventures, increased by 10 per cent to reach SEK 35.4 billion. Portfolio investments during the year amounted to SEK 7.3 billion (11.9), which was in line with the more normalised level we anticipated. Return on investment was 15 per cent (14), excluding revaluations.
Improved financing profile
During the year, we strengthened our financial position with a number of bond issues and an increased credit facility. This has enabled us to achieve a more predictable and improved maturity profile, while also securing a reassuring liquidity buffer, which is very important given the general global outlook in the first quarter of 2020.
A strong platform for long-term growth
2019 was an eventful year for Intrum, particularly in terms of transactions. Today, we are the natural partner on the European market for non-performing loans – a position we are determined to cement further.
Intrum’s purpose – to lead the way to a sound economy – is at the core of our strategy. During 2019, we intensified our efforts to integrate sustainability into our business and we implemented a clear governance structure to address these matters. Stakeholder dialogues have been held, including with the majority of our shareholders. It is of utmost importance for us to act ethically in our daily collection work by treating individuals with respect, and by carefully selecting the clients we support and the portfolios we acquire. It is also important for us to retain and develop our employees by ensuring their wellbeing.
It is of utmost importance for us to act ethically in our daily collection work by treating individuals with respect, and by carefully selecting the clients we support and the portfolios we acquire.Mikael Ericson, President and CEO
Since 2016, Intrum has been a signatory to the UN Global Compact. Every year, we report how we implement the Compact’s 10 sustainability principles and outline how we will work on further implementing the principles in our activities in the coming year. We are also continuing our work on national and European level to, together with legislators and other actors, develop our industry in a responsible and more professional direction.
Due to the current global situation, we have decided to postpone our capital markets day that had originally been planned for May 19th until the autumn.
President and CEO
Stockholm, March 2020
Read more about our journey and the steps we have taken to further consolidate our market-leading position in Europe in our Annual and Sustainability Report for 2019