Intrum Justitia Earnings Up Slightly in Q1, Revenue Declines

European ARM firm Intrum Justitia today released an interim earnings report covering operations from January through March 2010.

First quarter 2010 (Q1 2009 results in parentheses)

• Consolidated revenues for the first quarter of 2010 amounted to $132.2 million ($139.5 million), a decline of 5.2 percent. Currency effects amounted to –7.2 percent (13.2). Organic growth was 1.4 percent (4.8).
• Operating earnings (EBIT) amounted to $21.7 million ($21.6 million). Revenues and operating earnings include net purchased debt revaluations of -$332,000 (-$2.8 million). Excluding these items, operating earnings (EBIT) were $22 million ($24.5 million), corresponding to an operating margin of 16.6 percent (17.2).
• Net earnings for the first quarter amounted to $13.9 million ($13.5 million) and earnings per share before dilution amounted to $0.17 ($0.17).
• Investments in purchased debt amounted to $23.6 million ($15.3 million).

Comment by President and CEO Lars Wollung:
Adjusted for currency fluctuations, operating earnings rose by 9 percent over the first quarter of the year and revenues by 2 percent. The trend was favorable in the regions United Kingdom & Ireland and Netherlands & Belgium. Considering market conditions, the quarter was highly satisfactory in the region France, Spain, Portugal & Italy.

The improvement program in the region Sweden, Norway & Denmark continues and operating earnings there rose by 7 percent compared with the preceding year. The region Switzerland, Germany & Austria has also initiated extensive programs of measures that, with time, will lay the foundation for better capacity for sustainable earnings. Operating earnings rose by 13 percent compared with the fourth quarter of 2009.

Although the negative trend continues in the region Poland, Czech Republic, Slovakia & Hungary, a rigorous program has begun, combining investments and personnel cutbacks, and this is expected to generate visible effects in the latter half of 2010.

In the region Finland, Estonia, Latvia & Lithuania, the revenue increase in CMS amounts to more than 10 percent in local currencies. However, earnings were weakened as a consequence of increased collection costs. The principal decline in earnings is attributable to the Purchased Debt service line in the region. The portfolio mix continues to be adjusted towards a larger proportion of fresher receivables, entailing a lower level of risk but also a lower margin.

The trend in the Purchased Debt service line was favorable with a return of 15.7 percent for the quarter, compared with 11.4 percent for the year-earlier period.

In the Credit Management service line, operating earnings amounted to $14.7 million; unchanged compared with the seasonally stronger fourth quarter in 2009. Compared with the first quarter of 2009, operating earnings fell by 4 percent adjusted for currency fluctuations. A number of activities to boost sales and strengthen our market position are in progress in several countries.

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 $568 million in 2009. Intrum Justitia AB is listed on Nasdaq OMX Stockholm since 2002. For further information, please visit www.intrum.com