Q2 2026 Intrum AB Earnings Call Transcript
Key Points
- Successfully executed a capital raise and a SEK2.4 billion portfolio sale, improving the pro forma service leverage ratio from 6.2x to 4.3x, with a long-term target of 3.0x.
- Credit ratings improved following the balance sheet actions, with both Standard & Poor's and Moody's upgrading Intrum AB (ITJTY).
- Operational transformation is on track, with FTEs reduced by 8% year-on-year and total costs at 11.9% on a rolling 12-month basis, moving toward the 2030 target of 10%-11%.
- Traditional markets continue to show organic growth, with a 5% increase in servicing income, and the quarterly collection index improved, exceeding active forecasts.
- The company is accelerating its operational excellence program, with identified savings exceeding initial ambitions, and plans to expand it to more countries.
- Post capital raise, Intrum AB (ITJTY) has increased financial flexibility, enabling a higher investment pace, with a strong pipeline of deals expected to materialize in the second half.
- New portfolio investments in Q2 achieved a high blended IRR of 19%, and the company remains disciplined in its investment execution.
- The company is actively managing its debt maturities through tender offers on 2027 and 2028 bonds, reducing interest expenses and improving the refinancing profile.
- Hedge accounting on FX swings has been implemented, reducing volatility in net financial expenses, with about SEK400 million of FX swings offset in Q2.
- Servicing EBIT margin remained stable at 25%, and the company is confident in its ability to maintain cost discipline despite top-line challenges.
- Servicing income growth is behind plan, with negative organic growth of 2% in Q2, making it more challenging to achieve flat servicing income for 2026.
- Specialized markets, particularly Greece and Spain, continue to decline, with a 4% drop in servicing income, offsetting growth in traditional markets.
- Germany is facing operational challenges, including longer-than-expected client onboarding and performance issues with existing clients, impacting growth.
- The consolidation of Savoy has increased costs by about SEK100 million per quarter, which may not be fully offset, affecting the cost base.
- The investment book continues to decay due to lower new investments compared to amortization, creating a headwind on income, with a delay before increased investment pace shows in results.
- The company expects the blended IRR on new investments to decline as investment volumes increase, though it will remain above the cost of funding.
- A one-off tax expense of almost SEK100 million in Italy related to a tax audit negatively impacted Q2 results.
- The company is cautious about taking on new clients in Germany until the platform is stabilized, which may limit near-term growth opportunities.
- The acceleration of the operational excellence program may lead to redundancy costs, potentially impacting 2026 results.
- The company's long-term cost target may need to be adjusted toward the lower end (SEK10 billion) due to softer top-line growth, indicating potential margin pressure.
Thank you and good morning, everyone. Welcome to this second quarter report call.
We start with the first page where we want to do a couple of highlights. I like to comment that, I mean, this is the second quarter where we are executing on a new strategy. The number one priority when we introduced our strategy was how to improve the leverage and the balance sheet of the company. And as you all know, a huge amount of work has been dedicated to do exactly so in Q2 with the capital raise and the SEK2.4 billion portfolio sale and we have also seen the effects of that by Standard and Poor Moody's improving our credit ratings. The service leverage ratio on a pro forma basis has moved from 6.2 to 4.3 and the long-term target is 3.0.
We also see that our operational transformation is continuing to pay off. Our costs are developing according to plan. And when looking at FTEs, which is one of the things that we are working with, making our processes automated or AI-fied or just more efficient, has reduced by 8% year on year. Our
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