· Consolidated net revenues for the third quarter of 2014 amounted to SEK 1,309 M (1,135). · Operating earnings (EBIT) amounted to SEK 415 M (330). Operating earnings include revaluations of purchased debt portfolios amounting to SEK 15 M (negative 2). · The operating margin was 32 percent (29), including revaluations of purchased debt portfolios. · Net earnings for the quarter amounted to SEK 311 M (222) and earnings per share were SEK 4.09 (2.79). · Disbursements for investments in Purchased debt amounted to SEK 271 (692). · Cash flow from operating activities amounted to SEK 788 M (647).
Comment by President and CEO Lars Wollung
Intrum Justitia’s performance was good in the third quarter of 2014. Our business model, combining credit management services and financial services, has continued to generate profitable growth and strong cash flows. Consolidated income rose by 9 percent and operating earnings increased by 16 percent compared with the year-earlier period, adjusted for currency effects and revaluations of purchased debt portfolios. The consolidated operating margin was 32 percent for the third quarter, compared with 29 percent in the year-earlier period. As with previous quarters in 2014, this performance was mainly due to the Financial Services business line, which showed increased volumes of purchased debt and improved operating efficiency. Earnings per share have risen by 34 percent over the past 12 months.
Within our regions, it is chiefly Central Europe and Western Europe that are contributing to the improvement in consolidated earnings. Our Central European region has shown strong earnings improvement in purchased debt in recent years, helped by increased activities in the area of collection measures through the legal systems. Western Europe has also been boosted by increased investments in purchased debt and positive performance from acquisitions in credit management. Our region Northern Europe has a continued strong profitability. The earnings development in the region has however been relatively unchanged compared with last year, owing mainly to lower investment volumes in purchased debt for a period of time.
Our Financial Services line showed positive performance in terms of growth and profitability, with purchased debt generating a 21 percent return in the third quarter. Collection of purchased debt remained strong in the quarter, with operating earnings rising by 31 percent compared with the year-earlier period. Investment levels for purchased debt, however, were significantly lower in the third quarter than the year-earlier period, which is partly due to the third quarter of 2013 being unusually strong. We still believe we will see good growth in Financial Services over a number of years. However, the level of investments in purchased debt may vary considerably in individual years as a result of changes in market conditions in terms of offering, prices levels and competition.
Our Credit Management service line showed a continued stable trend in the third quarter. We are showing a certain positive development in terms of revenues from external customers and operating margins were up on the year-earlier period. In line with the Group’s strategy of growing value creation in Credit Management through bolt-on acquisitions, earlier in October we announced that we are strengthening our market position in Denmark by acquiring a business with a complementary customer base and a cost base that offers good opportunities for significant synergies.
Presentation of the Interim Report
The interim report and presentation material are available at www.intrum.com/Investor relations. President & CEO Lars Wollung and Chief Financial Officer Erik Forsberg will comment on the report at a live webcast today, starting at 9:00 a.m. CET. The presentation can be followed at www.intrum.com and/or www.financialhearings.com. To listen in to the conference live, please dial +44(0)20 766 020 81 (UK) or +46 (0)8 519 993 51 (SE).
For further information, please contact:
Lars Wollung, CEO & President Tel: +46 (0)8 546 102 02
Erik Forsberg, CFO Tel: +46 (0)8 546 102 02