· Intrum concluded a strong 2019 but items affecting comparability impacted reported results · Stable CMS margins and good cost control · Portfolio investments end 2019 strongly · Firm foundations in place for further growth going into 2020
Fourth quarter, October-December 2019:
• Consolidated net revenues increased to SEK 4,663M (3,517).
• Adjusted EBIT increased to SEK 1,821M (1,236).
• Elevated non-recurring items in the quarter e.g.:
- Non-cash intangible asset impairment in Spain of SEK 2.9 billion reflecting changed market conditions, visible in our figures the past couple quarters.
- Other non-recurring items totaling SEK 1.3 billion whereof efficiency program constituting SEK 0.6 billion.
• Net debt / cash EBITDA amounted to 4.3x (4.3x).
• Portfolio investments amounted to SEK 3,780M (5,444). Return on portfolio investments increased to 14 per cent (13).
• Net profit decreased to SEK -2,482M (482), and earnings per share decreased to SEK -18.84 (3.70).
• Cash flow from operating activities increased to SEK 1,837M (1,813).
Full year 2019:
• Consolidated net revenues for 2019 amounted to SEK 15,985M (13,442).
• Adjusted operating profit (EBIT) increased to SEK 6,208M by 38 per cent versus adjusted operating profit (EBIT) of SEK 4,500M in 2018.
• Net profit amounted to SEK -285M (1,943) and earnings per share were SEK -2,76. Adjusted for items affecting comparability in EBIT and financial net, the adjusted EPS amounted to SEK 27.8.
• Cash flow from operating activities increased to SEK 6,392M (6,154).
• The carrying value of portfolio investments, including properties and participation in joint ventures, increased by 10 per cent since the end of the previous year. The year's portfolio investments amounted to SEK 7,324M (11,854). The return on portfolio investments was 15 per cent (14).
• In Credit Management services, revenue growth amounted to 21 per cent and the operating margin was 26 per cent excluding non-recurring items.
• The Board of Directors proposes a dividend of SEK 11.0 per share (9.50).
Events after the reporting period
As communicated in November 2019, a new organisational setup was implemented as of 1 January 2020. The aim is to achieve increased efficiency and thus strengthen competitiveness. The former four geographical regions were removed and a third new business line created, “Strategic Markets, consisting of Intrum’s key southern European markets (Spain, Italy and Greece) in parallel with the existing “Credit Management Services” and “Portfolio Investments”.
Comment by President and CEO Mikael Ericson
“I am pleased that the development of the business continued to progress well in Q4 with adjusted EBIT up 47 per cent year-on-year, coupled with a high portfolio investment pace at stable underwriting levels.
Due to headwinds experienced in Spain in recent years, we have adjusted our balance sheet by impairing SEK 2.9 billion of intangible assets. This adjustment reflects the earnings level observed in recent quarters compared to earlier periods when Spain was characterised by different market conditions. In addition to the adjustment of intangibles in Spain, our results are impacted by non-recurring items that relate to our previously communicated efficiency programme of SEK 0.6 billion, M&A transaction related costs, impairment of group IT assets and other items relating to integration costs etc.
Our CMS business reported stable margins of 27 per cent (27 per cent) and the portfolio investment business made investment totalling SEK 3.8 billion (5.4 billion), growing our portfolio book value to SEK 35 billion at stable underwriting levels.
2019 provided a good foundation for further growth going into 2020. We note that 2020 is off to a good start and see a continued high activity across Europe on the non-performing loan market. We retain our ambition to reach a Net Debt/EBITDA of 2.5-3.5x and EPS of SEK 35 by year-end, acknowledging that this requires flawless execution of our 2020 business plan.”
Dividend proposal
The Board of Directors of Intrum AB proposes that the Annual General Meeting distribute a dividend to the shareholders of SEK 11 per share (9.50), corresponding to a total of SEK 1,440M (1,250).
Presentation of the year-end report
Mikael Ericson, President & CEO, and Anders Engdahl, CFO, will present the results and answer questions. The conference will be held in English.
Link to live webcast
https://tv.streamfabriken.com/2020-02-04-intrum-press-conference
To listen in to the conference live, please dial:
UK: +44 3333000804
US: +18558570686
SE: +46 856642651
Participant Pin code:
66539347#
The interim report and presentation are available at www.intrum.com/investors/
For further information, please contact:
Viktor Lindeberg, Head of Investor Relations & Group Business Control
+46 (0) 8 546 102 02
+46 (0) 76 897 07 08
viktor.lindeberg@intrum.com
ir@intrum.com
This information is information that Intrum AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact person set out below, at 11:30 CET on February 4, 2020.