Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross revenue increased by 2% year over year, supported by a small portfolio sale in Spain.
- Cash EBITDA rose by 6% year over year, reaching EUR 59 million for the quarter.
- Operating expenses were reduced by EUR 2 million or 5% year over year, demonstrating effective cost control.
- The company aims to invest up to EUR 150 million for the year, with year-to-date investments at EUR 94 million.
- The Triple C segment experienced a 6% revenue growth, driven by strong performance in Norway, Spain, and Germany.
Negative Points
- Gross revenue declined by 3% year over year when adjusted for the portfolio sale in Spain.
- EBITDA decreased significantly to EUR 7 million from EUR 34 million last year, with a margin of 48%.
- The annualized return on equity in Italy was 0%, impacted by high interest rates and a challenging collection environment.
- Total income at the group level decreased to EUR 55 million from EUR 64 million in Q3 2023, affected by negative revaluations and higher amortization rates.
- The company faces cost pressures from increasing salaries, IT licenses, and office rents, necessitating ongoing cost reduction measures.
Q & A Highlights
Q: How are the portfolios purchased in recent years performing, and is the under-collection issue related to specific vintages? What is the risk of impairment if under-collection continues?
A: The under-collection issue is primarily a vintage problem, mainly affecting portfolios acquired from 2016 to 2020. If the collection performance remains at 90%, more portfolios may require revaluation and potential impairment. The risk of impairment depends on Q4 collections. Regarding the Interest Coverage Ratio (ICR), there is limited headroom, and mitigating actions are being considered, such as improving collections and buying accretive portfolios.
Q: Can you comment on the expected annual savings from the site consolidation in Italy?
A: We do not disclose specific numbers for the savings from the site consolidation in Italy. However, the initiative, along with changing the IT infrastructure provider, is part of broader efforts to maintain cost levels despite inflation. These initiatives are expected to yield substantial savings, particularly from mid-2025.
Q: How is the investment pipeline for Q4, and what are the trends in NPL prices?
A: Q4 has a healthy pipeline, especially in Spain and Italy, with some activity in the Nordics. However, NPL prices are moving in the wrong direction due to increased competition and new funds entering the market, which may impact our ability to reach the EUR150 million investment target.
Q: Does the portfolio sale contribute to cash EBITDA, and is it included in the rolling 12-month numbers?
A: Yes, the sale of the portfolio is included in the cash EBITDA for the quarter and is also reflected in the last 12 months' figures.
Q: Are the positive effects from hedging included in the Interest Coverage Ratio (ICR) calculation?
A: The hedge impacts the P&L but does not have a cash effect, so it is not included in the ICR calculation, which is based on cash metrics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
