The second quarter was characterised by continued progress to improve Intrum's financial profile, continued growth and margin development in Servicing, and significant advancements in the transition towards a capital-light business model.
Intrum announced the closing of its asset sale to Cerberus, with SEK 7.2 billion proceeds, which will be used in full to reduce leverage.
In addition, a term sheet regarding an Investment Agreement with Cerberus was signed for future investments in consumer unsecured non-performing loan portfolios. This allows Intrum to scale its investment activity without increasing debt, providing servicing revenues and additional portfolio management revenues, in line with the company's capital-light strategy.
In July, Intrum entered into a binding lock-up agreement with bondholders holding more than 50.1 percent of Intrum's 2025 - 2028 senior unsecured notes and MTNs, a significant milestone towards completing a comprehensive recapitalisation which facilitates substantial deleveraging and supports long term sustainable growth.
Second quarter in summary
- Income up 6% vs. Q2'23 driven by Servicing segment across all regions
- EBIT for the quarter increased to SEK 1,024 M vs. SEK 704 M in Q2'23 driven by increased Servicing income and net credit gains on the Investing segment (Q2'23: net credit losses), partially offset by a temporary reduction in JV earnings
- Costs have increased to SEK 3,652 M vs. SEK 3,568 M in Q2'23 due to M&A and inflation partially offset by the extended cost programs and increased operational efficiency
- Adjusted Income up 1% vs. Q2'23 driven by M&A in Servicing
- Adjusted EBIT decreased by 15% vs. Q2'23 as business mix moves increasingly towards lower margin Servicing segment. Servicing EBIT margin has increased ~3pp to 19% (16) vs. Q2'23
- Leverage ratio down 0.5x to 3.9x vs. Q1'24, driven by a reduction in net debt following completion of the portfolio investment back-book sale
- Progress on several strategic initiatives including: (i) successful completion of the portfolio investment back-book sale, (ii) refinancing and recapitalisation lock-up agreement, (iii) agreed investment management deal, securing future growth, and (iv) realised cost savings of ~SEK 900 M and implemented measures to save an additional ~SEK 300 M in 2024/25
Key financial highlights, April-June 2024 (April-June 2023)
- External Servicing income growth of 10%
- Servicing adjusted EBIT increased by 23% to SEK 692 M (563), implying an improved servicing adjusted EBIT margin of 19% (16) vs. Q2'23
- Collection performance exceeded active forecast at 102% (103) and exceeded original underwriting forecast at 116%
- New portfolio investments amounted to SEK 425 M (2,783) at an underwriting net IRR of 18% (15)
- Organic cash extraction of SEK 2.0 bn plus additional SEK 7.2 bn from the back-book sale
- Investing book-value excluding revaluations, stood at SEK 26 bn (41)
- Available liquidity at the end of the quarter was SEK 10.5 bn (12.6)
Andrés Rubio, President & CEO of Intrum, comments:
"In the second quarter, we made strong progress in executing our capital-light strategy, as set out at our Capital Markets Day in September 2023, with the sale of assets to Cerberus and the more recent term sheet we signed relating to future investments. These developments are the start of our journey as we grow our highly cash-generative Servicing revenue and pivot towards a capital-light business model and evolve into becoming an investment manager.
I am pleased to see the strong performance of our Servicing business with positive topline development driven by increased commercial activity, combined with increased margins leading to performance improvement across all of our regions. In parallel, our Investing business showed continued resilience and strong cash generation despite operating in a challenging economic environment."
Presentation of the interim report
Andrés Rubio, President & CEO, and Emil Folkesson, Interim CFO and Investor Relations Director, will present the results and answer questions in a webcast with teleconference at 9:00 a.m. CET. The conference will be held in English.
If you wish to participate via webcast, please use this link. Via the webcast you are able to ask questions in written.
To participate via teleconference, please use this link. After registration you will be provided phone numbers and a conference ID to access the conference. Via the teleconference you can ask questions verbally.
For further information, please contact:
Emil Folkesson, Interim CFO and Investor Relations Director
ir@intrum.com
| Intrum is the industry-leading provider of Credit Management Services with a presence in 20 markets in Europe. By helping companies to get paid and support people with their late payments, Intrum leads the way to a sound economy and plays a critical role in society at large. Intrum has circa 10,000 dedicated professionals who serve around 80,000 companies across Europe. In 2023, income amounted to SEK 20.0 billion. Intrum is headquartered in Stockholm, Sweden and publicly listed on the Nasdaq Stockholm exchange. For more information, please visit www.intrum.com. |
This information is information that Intrum is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-07-18 07:00 CEST.
