European Collection Agency Intrum Reports Strong First Quarter

European collection agency and bad debt buyer Intrum Justitia said Wednesday that net earnings for the first quarter of 2008 were up more than 9 percent as the company ramped up investment in debt portfolios and revenues surged.

Stockholm, Sweden-based Intrum reported revenues of $147.1 million for the first quarter, an increase of 13.7 percent from the first quarter of 2007. The company said that 10.5 percentage points of the growth was organic, while 1.9 points were due to foreign exchange and the rest owing to recent acquisitions (“Intrum Justitia Acquires Belgian Collectors,” March 18).

Net earnings for the quarter were up 9.1 percent to $18.3 million. Intrum reported an increase in operating margin to 19.3 percent in the quarter compared to 18.6 percent in the year-ago period.

Intrum also said that it increased the amount it spent on debt portfolio purchases by 74.5 percent to $34.7 million in the quarter. The company reported a write-up of $970,000 on purchased portfolios, primarily due to increased expectations of collections on portfolios bought in Poland, Czech Republic, Slovakia and Hungary. The total carrying value of purchased portfolio for the company stood at $325.8 million at the end of the quarter.

Commenting on the debt buying unit, President and CEO Michael Wolf said in a statement, “Purchased debt has developed well, and collections exceed our forecast models.”

Not all of the news Intrum shared Wednesday was positive. The company reported that it had lost its license to collect debt in Norway in the fourth quarter of last year, a decision that is under appeal (“Intrum Soldiers On in Norway, Appeals Loss of License,” Dec. 4, 2007). But Intrum said that it formed a new subsidiary in the first quarter of this year, Intrum Justitia Norway AS, that in March was approved to collect debt in the country.

Intrum also noted that its United Kingdom and Ireland unit was experiencing trouble as it posted a net operating loss for the quarter of $1.1 million. The company said that operations in England are improving – partly due to a government contract win there (“Intrum Justitia Wins UK Government Contract, and Promise of More,” March 3) – but that losses in Scotland and Ireland offset the gains in England.

The company said that the average number of employees in the first three months of 2008 was 3,049 compared to the 2,928 average a year ago.

Shares of Intrum Justitia are listed on the Nordic Exchange under the symbol IJ.