Fourth quarter 2013
Consolidated net revenues for the fourth quarter of 2013 amounted to SEK 1,231 M (1,054). · Operating earnings (EBIT) amounted to SEK 340 M (230). Operating earnings include revaluations of purchased debt portfolios amounting to SEK 7 M (negative 48). Operating earnings for the fourth quarter of 2012 were charged with costs relating to impairment of IT systems in Germany of SEK –17 M, and revaluations of purchased debt portfolios for the same quarter included SEK –52 M attributable to German portfolios. · The operating margin was 28 percent (22) including, and 27 percent (25) excluding revaluations of purchased debt portfolios. · Net earnings for the quarter amounted to SEK 236 M (176) and earnings per share totaled SEK 3.00 (2.19). · Disbursements for investments in purchased debt amounted to SEK 266 M (753). · Cash flow from operating activities amounted to SEK 664 M (653).
Full-year 2013
Consolidated net revenues for the full-year 2013 amounted to SEK 4,566 M (4,048). · Operating earnings (EBIT) amounted to SEK 1,207 M (879). Operating earnings include revaluations of purchased debt portfolios amounting to SEK 7 M (negative 83). · The operating margin was 26 percent (22) including, and 26 percent (23) excluding revaluations of purchased debt portfolios. · Net earnings for the year amounted to SEK 819 M (584) and earnings per share totaled SEK 10.30 (7.32). · Disbursements for investments in purchased debt amounted to SEK 2,475 M (2,014). · Cash flow from operating activities amounted to SEK 2,305 M (1,986). · The Board of Directors proposes a dividend of SEK 5.75 (5.00) per share, totaling SEK 452 M (399). · In third quarter of 2013 the company purchased 1 197 773 of its own shares, corresponding to around 1.5% of the total outstanding shares at the beginning of the year. Repurchases of own shares will continue during the first quarter of 2014.
Comment by President and CEO Lars Wollung
2013 was a strong year for Intrum Justitia, a year which ended with a 17‑percent increase in earnings in the fourth quarter and an operating margin of 28 percent. Operating earnings in the quarter rose by 18 percent compared with the year-earlier period, adjusted for revaluations of purchased debt portfolios and currency effects. Cash flow from operations increased by 2 percent to SEK 664 M in the fourth quarter and in 2013, earnings per share rose by 41 percent.
Over the quarter, all three geographic regions showed a continued positive trend, primarily the Western and Central Europe regions. The significant increase in investments in purchased debt in recent years is contributing to revenue growth and improved margins in all regions.
The Financial Services line developed well during 2013 and displayed a strong earnings trend in the fourth quarter as well. The return on purchased debt was 21 percent. Investments in purchased debt amounted to SEK 266 M, a considerably lower level compared with the year-earlier period and the previous quarter in 2013. The lower level of investment in the fourth quarter is due in part to a lower volume of investments in larger portfolios, where investment volumes can differ considerably between individual quarters and years, and partly due to lower investments in forward-flow contracts where the return level is estimated to not reach the Group’s return target. However, overall we are satisfied with the performance of portfolio investments in 2013, where we are achieving an increase of 23 percent compared with the previous year. Taken over the past five-year period, the annual increase in portfolio investments has been 23 percent.
Our Credit Management service line is developing steadily and the earnings trend from external customers remains positive. Adjusted for currency effects, revenues rose by 6 percent overall – an increase driven primarily by increased volumes from the Group's own portfolios of receivables. The service line’s margins for 2013 remained unchanged compared with the previous year. Work on streamlining the collection process, thereby improving margins in the service line, is continuing according to plan.
Our venture to increase our service offering with new services in factoring, as well as payment and financing solutions for e-commerce, is continuing and in the long term represents a good addition to our offering in Credit Management and Financial Services. The business in Sweden and Finland is developing according to plan, but the Dutch venture is not developing satisfactory and is currently being reviewed.
Presentation of the year-end 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 teleconference today, starting at 9:00 a.m. CET. The presentation can be followed at www.intrum.com and/or www.financialhearings.com. To participate by phone, call +46 (0) 8 505 564 82 (SE) or +44 (0) 207 660 20 78 (UK).