Intrum Justitia Interim Report, January–September 2010

Third quarter 2010

(NOTE: $1 = 6.73 SEK)

  • Consolidated revenues for the third quarter of 2010 amounted to SEK 922.9 M (1,023.2), a decline of 9.8 percent. Currency effects amounted to  6.3 percent. Organic growth was  2.2 percent (5.2).
  • Operating earnings (EBIT) amounted to SEK 211.2 M (147.2). Adjusted for currency effects and non recurring items in the United Kingdom & Ireland region in the third quarter of 2009, operating earnings rose by 11.0 percent. Revenues and operating earnings include net Purchased Debt revaluations of SEK 0.8 M (6.5).
  • Adjusted for revaluations of Purchased Debt portfolios, the operating margin amounted to 23.0 percent, compared with 20.2 percent for the third quarter of 2009 (adjusted for non recurring costs in 2009).
  • Net earnings for the third quarter amounted to SEK 144.9 M (98.7) and earnings per share before dilution amounted to SEK 1.82 (1.24). 
  • Disbursements for investments in Purchased Debt amounted to SEK 263.1 M (179.7), an increase of 46.4 percent.

Comment by CEO and President Lars Wollung:

Intrum Justitia is developing well given the prevailing market conditions with a slow macroeconomic recovery, primarily in Southern Europe. We continue to improve the Group’s operating earnings, with an increase of 11 percent in the third quarter, adjusted for currency effects and non recurring costs in 2009. The operating margin strengthened to 23 percent, compared with 20 percent for the corresponding quarter in 2009.

In the Credit Management service line, operating earnings (adjusted for currency effects) rose by 21 percent in the third quarter and the margin strengthened to 18 percent from 14 percent last year (adjusted for non-recurring costs attributable to the restructuring of operations in the United Kingdom). Over the year, we have implemented extensive personnel cutbacks throughout the Group and worked hard to enhance the efficiency of our operations and increase our market activities. This is now giving results in our Credit Management operations, which is of course pleasing.

In Purchased Debt, we are seeing a favorable trend in existing portfolios with a return of 16 percent for the quarter. The lower level of investment in 2009 has had a negative impact on revenues and earnings for the quarter. However, we are seeing increasing activity in the area and investments rose by 46 percent in the third quarter compared with last year.

In the region Sweden, Norway, Denmark, Finland, Baltics and Russia, we saw a highly favorable trend during the quarter with both increased revenues and operating earnings. Adjusted for currency effects, operating earnings rose 10 percent in the third quarter. During the quarter, the process of enhancing the efficiency of our operations while increasing sales efforts has produced the desired results, particularly in Scandinavia where we have implemented an extensive restructuring program this year. The trend in Credit Management in Sweden and Finland is positive, while we are now seeing the effects of reduced debtor fees in the Norwegian market.

In the United Kingdom & Ireland region, we are showing stable profitability and existing Purchased Debt portfolios are developing as planned. During the third quarter, we made a small number of investments in new portfolios, but a recovery in the Purchased Debt market has yet to materialize.

In the Netherlands & Belgium region Credit Management services are developing well. In local currency, the growth in revenue for the region was 6 percent adjusted for the change in accounting principles introduced in the second quarter.

In the Poland, Czech Republic, Slovakia & Hungary region, operating earnings for the third quarter improved to a loss of SEK 2 M, as an effect of the cost reduction program initiated during the year. Investments in legal measures are having an effect and revenues from early investments are now visible in earnings. However, we are continuing to increase the number of cases in the legal systems, particularly in Poland, which is increasing costs.

Although the France, Spain, Portugal & Italy region continues to be burdened by macroeconomic conditions, performance remains good. As a consequence of decreased Purchased Debt over the past year, operating earnings decreased by 15 percent adjusted for currency effects. Thanks to rigorous efforts to improve internal efficiency and intensified sales activities, a positive profitability trend can now be seen in Credit Management in most countries in the region.  

We continue to work on cost efficiency and other measures to strengthen profitability in the Switzerland, Germany & Austria region. We are seeing the effects of the program of measures initiated early in the year, although progress has been slower than expected. A lower level of investment in Purchased Debt over the past year has had a negative impact on earnings and revenues.

In the third quarter, we implemented the last in a long line of measures to create a strong organization able to meet demand for value adding Credit Management services throughout Europe. By creating three larger regions, we will be able to launch new services more rapidly and derive economies of scale within the Intrum Justitia Group. The three regions new regions are

Northern Europe (Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Poland and Sweden), Central Europe (Austria, Czech Republic, Germany, Hungary, Slovakia and Switzerland) and Western Europe (Belgium, France, Italy, Ireland, Netherlands, Portugal, Spain and United Kingdom)

Today, we see that demand is increasing for services combining traditional Credit Management with Purchased Debt. As a market leader, with an integrated range of services in these areas, Intrum Justitia benefits by this trend.

Intrum Justitia is Europe’s leading Credit Management Services (CMS) group and offers services designed to measurably improve clients’ cash flows and long-term profitability. Intrum Justitia was founded in 1923, has around 3,400 employees in 22 countries and revenues of approximately SEK 4.1 billion in 2009. Intrum Justitia AB is listed on NASDAQ OMX Stockholm since 2002. For further information, please visit


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