· Seasonally slower third quarter in a transitory 2023 · Income increased 9 per cent vs. Q3 ‘22 and 5 per cent vs. YTD ‘22 driven by both Servicing and Investing segments · Adjusted EBIT reduced by 13 per cent vs. Q3 ‘22 and 18 per cent vs. YTD ‘22 driven by cost growth in excess of income · EBIT YTD, increased by 108 per cent vs. YTD ’22 mainly due to the impact of the JV write down last year · Leverage ratio decreased 0.2x to 4.4x in the quarter driven by favourable FX movements and recent acquisition in Spain · Commercial focus with record ACV signings and increased win rate · Delivered on several strategic priorities: completed the divestment of Estonia and Latvia and the acquisition of Haya Real Estate, eCollect and Ophelos
Financial results in brief, July-September 2023 (July-September 2022)
- Adjusted income increased to SEK 4,959 M (4,530)
- Adjusted EBIT decreased to SEK 1,353 M (1,564)
- Cash EBITDA increased to SEK 3,160 M (3,009)
- External Servicing adjusted income growth 13 per cent CAGR
- RTM Servicing adjusted EBIT margin 17 per cent (24)
- Investing book-value excluding revaluations stood at SEK 39 bn (40)
- Available liquidity at the end of the quarter was SEK 9 bn (17)
Presentation of the interim report
Andrés Rubio, President & CEO and Michael Ladurner, CFO, will present the results and answer questions in an audiocast with telephone conference at 9:00 a.m. CET. The conference will be held in English.
To participate via audiocast, please use this link
To participate via teleconference, please register here
Comment by President & CEO Andrés Rubio
“At the Capital Markets Day in September, we presented our strategic priorities for the coming three years underpinned by three pillars. First, operational excellence, where technology and automation will help us create an efficient and scalable operating platform while improving our collections capability. Second, client focus, where we emphasise profitable growth through client centricity. Third, capital light, which is about extracting cash from our back-book and pivoting to a capital light business model.
We also announced the acquisitions of Ophelos and eCollect, two companies set to accelerate our tech-transition and advance our client value proposition going forward while becoming more efficient. The integration of Ophelos is well under way with pilots in Belgium and Netherlands, and we have first client signed for new invoicing solution with eCollect.
On the commercial side, we have seen continued high commercial activity in a seasonally slower quarter. We signed a transformational contract with Buildingcenter in Spain and a meaningful increased mandate with Virgin Money in the UK. We have also been awarded a large contract with Sykehusinnkjøp (hospitals) in Norway where the key reason for our selection was the quality of our service rather than the price. These efforts to drive the commercial development are visible in our total annual contract value (ACV) signings. At the end of September, 2023 ACV signings amounted to SEK 1.1 billion (690 million in 2022).
In the third quarter, income was SEK 4,959 million (4,539), translating to an increase of 9 per cent. Servicing income amounted to SEK 3,441 million (3,103), while Investing total income stood at SEK 2,173 million (2,083). Adjusted EBIT decreased 13 per cent to SEK 1,353 million (1,564) for the quarter and reduced 18 per cent to SEK 3,888 million (4,736) for YTD due to increased costs in excess of increased income.
Underlying costs, excluding Items Affecting Comparability, have increased 15 per cent to SEK 3,647 million (3,161) and 12 per cent to SEK 10,657 million (9,503) for the quarter and the year, respectively, with currency movements contributing 10 per cent for the quarter compared to Q3 ’22 and 8 per cent YTD. The cost program launched during the first quarter is principally focused on non-production elements which constitute approximately half of the above mentioned adjusted cost base.
When looking closer at progress related to our cost program, we have already achieved run rate cost savings of SEK ~350 million, mainly from redundancies which will gradually come into the results over the coming quarters. The progress to date make me comfortable with the previously communicated target of more than SEK 800 million with the majority to be achieved on a run-rate basis by end of 2023.
Our near-term ambition to extract value from our Investing business delivered a cash EBITDA of SEK 2.8 billion, with SEK 530 million reinvested in portfolios in the quarter. The leverage ratio currently stands at 4.4x where the reduction, compared to Q2 ’23, is mainly driven by including the RTM results of Haya. In addition, we had favourable FX movements in the quarter.
I want to repeat and emphasise that our top near-term priority is to reduce leverage and our cost base. This quarter we have lowered our proprietary investments, reduced operating costs and we are progressing on our plan to potentially exit selected tactical markets. All cash flows from these tactical measures will repay debt and de-risk our platform.
Surging inflation and higher borrowing costs are taking a toll on household finances, while many companies are conserving cash by delaying payments, causing severe liquidity issues across Europe. Intrum’s role in the financial ecosystem is as important as ever. In the last 12 months we have helped 5.2 million individuals to become debt free with Intrum and collected SEK 97 billion for our clients.
To conclude; during the third quarter we have taken some important steps in improving and strengthening Intrum, and I am confident that we are on the right track. Step by step, we will execute on the realisation of Intrum’s full potential over the coming years. In the meantime, we will concurrently focus on delivering on our near-term tactical measures.”
For further information, please contact:
Emil Folkesson, Head of CFO Office & Investor Relations Director
ir@intrum.com
This information is information that Intrum AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07.00 CET on 25 October 2023.