Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kruk SA (STU:83I, Financial) reported the best six months in its history with a net profit of PLN603 million, a 14% increase year-on-year.
- The company achieved a record high cash EBITDA with an 11% increase in recoveries, significantly beating accounting forecasts.
- EPS grew by 14%, and the company paid out a dividend of PLN18 per share, maintaining a high return on equity at 26%.
- Kruk SA (STU:83I) continues to expand internationally, with over 60% of investments now outside Poland.
- The company is investing in technology to enhance efficiency and customer interaction, which is expected to drive growth over the next four years.
Negative Points
- Investment in new portfolios decreased to PLN900 million, less than 50% of the PLN2.5 billion target for the year.
- Operating expenses grew by 20% year-on-year, driven by increased legal and court fees.
- The Spanish market underperformed, with a significant negative revaluation and increased legal fees impacting EBITDA.
- The company faces a competitive market environment, requiring hard work to achieve good IRRs.
- Potential future tax implications from the OECD's Pillar 2 regulation could affect the company's effective tax rate.
Q & A Highlights
Q: Do you see negative trends in recoveries, especially after July and August?
A: Overall, no. We see positive trends in Poland, Romania, and Italy continuing. We are still somewhat below the operating plan in Spain, but this was expected after the review. - Michal Zasepa, CFO
Q: How do you see your competitive position considering difficulties faced by peers?
A: We hold a strong competitive position, likely number one in market share across four countries, with shares between 30% and 50%. Despite increased competition, we maintain good IRRs. - Michal Zasepa, CFO
Q: When will we know your strategy, and what should we expect?
A: We will communicate a new strategy by the end of this year, aiming to double our business by investing PLN12 billion to PLN15 billion in portfolios over the next four to five years, with a focus on technological transformation. - Michal Zasepa, CFO
Q: Could you elaborate on the accumulated performance of the Spanish portfolio since acquisition?
A: Overall performance is good, with most portfolios yielding mid-teens or higher IRRs. One midsize portfolio yields lower returns, but the rest are performing well. - Michal Zasepa, CFO
Q: Is there any opportunity for Kruk SA to expand into countries outside of Europe?
A: While there are options, we currently focus on opportunities within Europe. However, the UK and US markets are of interest for potential future expansion. - Michal Zasepa, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
