Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- B2 Impact ASA (STU:B28, Financial) reported a strong performance in unsecured collections, achieving 108% of the latest forecast.
- Operating expenses decreased by 7% compared to the previous year, reflecting successful cost reduction initiatives.
- The company completed a refinancing plan that significantly reduced the cost of debt, with an expected annual savings of NOK275 million.
- B2 Impact ASA increased its dividend for 2023 to NOK1.3 per share, providing a direct return of around 15% annually.
- The company maintains a strong investment pipeline and expects to meet its investment target of NOK2.5 billion to NOK3 billion for 2024.
Negative Points
- Cash collections were slightly down from the previous year, primarily due to lower REO sales and secured collections.
- The company has not invested in secured portfolios for several years, leading to a decline in secured collections.
- Interest costs, although reduced, still impact the bottom line, with further reductions expected in future quarters.
- The number of full-time employees (FTEs) has decreased significantly, which may impact operational capacity if not managed carefully.
- There is increased competition in the market, with some external funds entering the sector, potentially affecting investment opportunities.
Q & A Highlights
Q: Can you clarify if the Q4 interest cost below NOK200 million includes amortization fees, and what is the new run rate for these fees?
A: The interest cost and commitment fees mentioned do not include amortization fees. The amortization fees are expected to align with previous periods. - André Adolfsen, CFO
Q: Which markets are driving the over-collection on unsecured assets, and how do you view the competitive situation given increased activity from funds?
A: We see strong collection across most markets, with some initiatives positively impacting collections. The pipeline is robust, and we expect to meet our investment target of NOK2.5 billion to NOK3 billion. While some markets have seen IRRs decrease slightly, we are still investing at favorable levels compared to pre-pandemic times. - Erik Just Johnsen, CEO
Q: Regarding the Q3 trading update, secured cash collections were expected to be above Q2 but were slightly below. Can you explain the deviation?
A: The secured cash collections were in line with the previous quarter, except for one REO sale that moved to Q4. Cash from joint ventures is collected but not yet reported, which will be reflected in Q4. - André Adolfsen, CFO
Q: With a hedging ratio of 77%, will further decreases in base rates benefit you, or have you locked in lower rates?
A: We have secured a reduction of almost 1% compared to current floating rates, so rates would need to drop significantly for us not to benefit from our swaps. - André Adolfsen, CFO
Q: How will you finance the expected NOK1 billion in investments given your current cash position and dividend payments?
A: We have a liquidity reserve of around EUR200 million and expect strong cash flow in Q4, allowing us to meet our investment targets without issuing new debt. - André Adolfsen, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
