CEO letter: "ONE Intrum paves the way for long-term growth"
2020 was a challenging year. A year in which the Covid-19 pandemic changed conditions for the entire world. I am proud of how we at Intrum successfully managed to conduct our business, maintaining high standards of customer service, and at the same time transitioning to remote working for three quarters of our employees.
Since the outbreak of the pandemic in Europe at the beginning of 2020, the wellbeing of Intrum’s employees has been our top priority. Put simply, we need to do this to be able to assist our clients and customers with relevant services and solutions. Given the challenging times we continue to face, I am deeply impressed by the professionalism of all colleagues and the sustained focus on clients and customers, which enabled us to deliver strong results for the full year.
Strong results despite challenging conditions
All key cash performance indicators and expected returns on purchased receivables improved during the year compared with 2019, and the year ended with a period of strong new sales in the Credit Management Services segment. We entered 2021 with a record-breaking pipeline for our service offering, which shows an increased relevance and interest in our client offering.
In Credit Management Services and Strategic Markets, however, we saw slightly lower inflows of new volumes against the backdrop of extended payment periods and delayed sales processes of portfolios with overdue receivables, which in turn had a negative effect on earnings for the full year.
Overall, Strategic Markets performed very well in 2020, with Greece making a strong contribution. Operations in Greece were consolidated for a full calendar year for the first time and performed in line with our original business plan, which is impressive given the pandemic. Results in the Portfolio Investment business were also strong throughout the year in all asset classes.
We entered 2021 with a record-breaking pipeline for our service offering, which shows an increased relevance and interest in our client offering.Anders Engdahl, President & CEO
In November, we held a capital markets day during which we presented new financial targets for the coming years, (see page 21 in the Annual and Sustainability Report for 2020 for details). Our new targets reflect the strong underlying cash flow in our business and highlight the robust performance over time.
This is especially true in periods such as 2020, when despite challenging market conditions, we achieved positive growth in all key cash indicators. We also chose to present this in relation to how much capital we have actually invested, which demonstrates the total cash flow return we generate in the servicing and the Portfolio Investment business.
Accelerating towards ONE Intrum
In parallel with managing and dealing with the pandemic’s impact on our operations, during the second half of the year we focused on accelerating our transformation program designed to harmonise and simplify systems, processes, and working methods.
Intrum’s existing integrated business model and strong market position has been made possible through the growth in recent years, primarily through acquisitions and strategic partnerships. However, our current multi-local operating model needs to be changed to strengthen our long-term competitiveness, creating the conditions for continued organic growth and a good return on invested capital.
ONE Intrum involves a global digital collection process based on a common infrastructure.Anders Engdahl, President & CEO
This is why we launched the ONE Intrum transformation program during the year, with the aim of becoming a truly global company and taking advantage of the opportunities in the short and medium term, as well as in credit management and portfolio investments that we see in the market.
The transformation journey we have started is one of the most important steps we as a company have ever taken. ONE Intrum involves a global digital collection process based on a common infrastructure.
As ONE Intrum, we will be able to strengthen our value proposition to clients and customers and at the same time significantly improve efficiency. The results of the transformation programme will create significant leverage as the market recovers from Covid-19. This, combined with improved scalability, will enable organic growth while maintaining attractive returns going forward.
For example, at the end of the year we went live with the multilingual contact centre in Athens, where cases are now handled in full. At the time of writing, approximately 20,000 customers are contacted on a daily basis. The opening of new multilingual contact centres in Bucharest and Malaga is progressing according to plan and we are in the process of recruiting skilled employees. In terms of our key figures for the transformation, we are successfully meeting targets for the number of migrated cases and reduced collection costs, and we expect to continue delivering against them. During the second half of 2021, we anticipate a significant number of cases will be transferred to the new platform.
Intrum’s contribution to sustainable development in Europe
Access to well-functioning financial services to pay, borrow, finance, save and invest is an engine for the whole economy and a prerequisite for growth. Access to cash is business-critical for all companies.
The pandemic has redrawn the rules of the game and created a new, and in many cases challenging, daily reality for European companies where their customers have in some instances disappeared overnight as a result of shutdowns. In our own annual surveys (European Payment Reports) we have seen, among other things, that small and medium-sized companies have been particularly affected and some sectors are more vulnerable than others. For example, many companies in the real estate and construction sector were forced to accept longer payment periods than normal to avoid bankruptcy.
During the second half of the year, we also set clear sustainability goals. These are strongly rooted in Intrum’s business strategy and how we create value for our various stakeholders.Anders Engdahl, President & CEO
Never before have we, as a credit management company, played a more important role than we do today. We are currently doing everything we can to help keep Europe’s economic wheels turning. Intrum’s purpose, to lead the way to a sound economy, offers considerable value to all our target groups: our clients, their customers, our employees, and for society as a whole.
During the second half of the year, we also set clear sustainability goals. These are strongly rooted in Intrum’s business strategy and how we create value for our various stakeholders. Among other things, this is about measuring how we behave towards our customers. In these challenging times, our values Empathy and Ethics are more important than ever, and in 2020 we developed complementary guidelines to ensure a responsive and respectful approach. We have defined climate goals, measure client satisfaction and regularly follow up on how motivated and satisfied our employees are.
Intrum has been a member of the UN Global Compact since 2016. Therefore, we report how we apply the Compact’s 10 sustainability principles every year, and we are constantly working to further integrate these principles into our business. We also continue to work at European and national level to, together with legislators and other actors, develop our industry in a sound and even more professional direction.
Positioned for growing demand with a record-strong pipeline
Near future prospects are somewhat uncertain in light of the pandemic’s continued impact on individuals, societies, and its consequences in different countries, such as various political decisions linked to the pandemic that affect companies and individuals.
At the same time, we note that our clients are increasing their share of unpaid receivables and are increasing their provisions for future credit losses, and many customers are more careful with their payments.
Strong value-driven culture and dedicated employees I am impressed and proud of our employees who have really strongly delivered in an unpredictable and challenging period. I would like to thank them for their dedication and loyalty.Anders Engdahl, President & CEO
We are also seeing the beginning of a significant build-up of portfolio volumes of non-performing loans (NPL) in the European financial system and based on our conversations with clients, we expect sales and service volumes to increase gradually in 2021. It therefore feels very good that we, due to our good adaptability, managed to handle the pandemic in 2020, and with our transformation programme, have created favourable conditions for taking advantage of the organic growth opportunities that arise in the wake of the pandemic.
Strong value-driven culture and dedicated employees I am impressed and proud of our employees who have really strongly delivered in an unpredictable and challenging period. I would like to thank them for their dedication and loyalty.
We see clear signs of increased business volumes in the coming years. When the effects of the pandemic subside, we first expect to see a normalization and then an increase in demand for our services as well as an increased range of portfolios with attractive returns as a result of the pandemic.
In addition, we have a clear vision for a strengthened Intrum, which will benefit our clients, customers, employees, investors, and society. Intrum is equipped for continued growth with increasing returns and a healthy balance sheet. Based on this, we propose a dividend of SEK 12 per share.
I look forward to our very exciting transformation journey towards ONE Intrum, which will be a simple, scalable, digital, relevant, and growing company.
President & CEO
Intrum's Annual and Sustainability Report for 2020
In 2020, Europe awoke to a new reality. The Covid-19 pandemic swept across the world with major consequences for individuals and companies, as well as for society in general. Over the year, we did our utmost to help both companies and individuals return to a sound economy and to keep the wheels of Europe turning.