Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intrum AB (ITJTQ, Financial) reported a significant increase in EBIT, more than doubling to over a billion SEK, indicating strong financial performance.
- The company achieved a positive net income for the first time since 2023, reflecting successful cost-cutting and strategic refocusing efforts.
- Margin improvements were noted across all major regions, with the servicing business margin increasing from 9% in Q1 2024 to 21% in Q1 2025.
- Intrum AB (ITJTQ) successfully concluded a recapitalization process, with favorable rulings in both the US and Swedish courts, setting the stage for future growth.
- The company is actively incorporating technology, such as AI tools and the Ophellos platform, to enhance collections and improve profitability.
Negative Points
- Servicing income was slightly down, attributed to a decrease in assets, which could impact future revenue streams.
- The investment book is shrinking, with a targeted investment of SEK2 billion per year, below the replenishment level of SEK3 billion, potentially affecting long-term growth.
- The EBIT margin for the investment division fell to 48% in Q1, due to the aging back book, which is becoming more costly to collect.
- Organic growth in servicing remains a challenge, particularly in Southern Europe, where structural declines in Spain and Greece are impacting top-line growth.
- The leverage ratio remains flat at 4.5, with discontinued business affecting cash flow, posing challenges to achieving the target leverage ratio.
Q & A Highlights
Q: With the improvement in expenses, should we expect the current staff cost to be the new running rate, and what reductions do you see from Ophelios being rolled out in Portugal and Italy?
A: Johan Akerblom, CFO: There will be a slight run rate effect throughout the year, but the true impact of technology like Ophelios will be more evident in 2026. We expect costs at the end of the year to be lower than at the beginning, with further reductions into 2026.
Q: Are the margins at lower levels due to the book becoming too small, or is it because the book is becoming too old?
A: Johan Akerblom, CFO: It's primarily because the book is getting older, requiring more effort for collections. We are looking at making our PI structure more efficient to address this.
Q: Can you achieve a 25% servicing margin for the full year 2025 given the strong start in Q1?
A: Andres Rubio, CEO: We are comfortable with the 25% target. While we initially expected to approach it, outperforming in Q1 gives us confidence in achieving it, though the exact timing may vary.
Q: When should we expect to see meaningful contributions from management fees in the Servers partnership?
A: Andres Rubio, CEO: While some fees will be seen this year, meaningful contributions will likely ramp up next year. We plan to disclose these figures in a more discrete fashion in the second half of this year.
Q: What is the average duration of the orange book, and should we expect any write-downs due to the aging backbook?
A: Andres Rubio, CEO: The orange book has a typical duration with collections over the next 15 years, skewed to a weighted average of slightly less than five years. We do not anticipate any meaningful write-downs in the medium term as we have historically collected above original forecasts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
