Intrum AB (publ)

Welcome to the interim Q3 2026 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound five on their telephone keypad. Now I will hand the conference over to President and CEO Johan Akerblom and CFO Masi Yazdi. Please go ahead.

Good morning, everyone, and welcome to this Q3 presentation. I'm here with Masi and we'll take you through the results and then we will open up for Q&A. So if we start with the highlights of the quarter, it feels like it's a Q2 event, but we actually did close the capital raise and the asset sale in Q3. and that together coupled with cost control moves the service leverage to 4.5. We started the year at 5.7 and we have set out the course towards 3.0 in 2028. The negative trend on the income side unfortunately continues from H1. And the drivers of that is mainly that we have development not according to plan in Germany and UK. And the German development has led that we have taken a goodwill impairment of 1.5 billion. It also means that the goodwill that we used to have in Germany is now completely written off. And as we said already in Q2, we have accelerated the operational excellence program and we're now working on a plan to take us towards 11 billion on total costs already in 2027. The cost base on a rolling 12 months in Q3 is 11.8, and we started the year 12.3. The investment pace has developed better than expected. We are underwriting 670 million onto our balance sheet in the quarter, and we have done so with an investment IRR of 17% blended. which is actually higher than we expected both in terms of volume and the returns which is a very good sign and it shows that we can hopefully get to replenishing levels at some stage and then make sure that the book stays flat. The servicing margin is flat year on year and we stay at 25% and we are here targeting 30-35% in 2030. If we move on and talk about the servicing, as I said, the margins remain stable and you will get a bit more details later on from Masi and the organic growth as in Q2. in the traditional markets can only partly offset the natural decline that we have in the specialized markets. But the two big deviations are UK and Germany. The traditional markets excluding Germany, they grew 3% in the quarter organic growth. And the margins remain stable. And I mean, the trend that we've had in the first half sort of continues into Q3. To give a little bit more details on what has happened, I mean, we had a plan. We think that the plan delivers, but we have two things that are standing out on the negative side. I mean, traditional markets, we see growth. We see the decline in Greece, Italy and Spain pretty much in line where we expected. But when we don't get the force of growth in UK and Germany, but rather having a decline in those two markets, that leads to an overall negative effect. Those are the two outliers that we didn't have in the original plan. Obviously, we are now taking measures to address that. In Germany, we have strengthened the management team during the year. We have a new commercial lead that starts next week or the week after. In Germany we have a new management sorry in UK we have a new managing director that joined us 1st of September. He's coming from Korea and he has a very strong commercial focus and we have also recruited a new commercial lead that started after summer in the UK. And on top of that we have also increased the sales capacity the new sales capacity of more than 30% across the board. and we have now a much more structured and focused approach on our commercial performance. And we will continue to take actions to improve the way we execute on the top line. What we have also done during the quarter is we have accelerated the operational excellence program. We had a plan from the beginning to do seven countries in 2026. We started the year with a central OPEX team that has fairly limited capacity. We have now recruited a number of people so we can broaden the program across almost the entire group. And we are now covering 17 countries this year. And that also means that we will see more effects and we will have quicker effects in general. And this is also why we are now working on on a plan to get to a total cost base of 11 billion in 2027. And we'll come back with more details when we have our Q4 results. Last but not least, on the investing side, the collections continue to be in line with our forecast or slightly above actually. We land the quarter at 1.01. We are at 1.07 versus the original forecast. But more importantly, the volumes have increased already the same quarter as we closed the capital raise. And this is one of the benefits with having a stronger balance sheet and more financial flexibility. We are keeping a blended IRR of 17% in the quarter and our investment levels are already now at the same level as they were in 2025. And as I think we said before, and we will continue to repeat, we have an aim to reach replenishing levels, which is around 3 billion annually, while maintaining the return requirements that we have. When expanding the volumes, we do expect that we will not be able to stay at 17-18% as we have been over the last quarters, but rather the return requirements will slightly go down, but they will still be sufficient enough for us to deploy capital. I think with that, I will hand over to Masi to take you through the financials. Thank you, Johan.

So looking at slide eight and looking at the group financials, in addition to what Johan already have said, just a few points on the cost side. We have obviously an elevated level. A lot of that is driven by the impairment in Germany as well as other items affecting comparability. Those other items total around 150 million during the quarter and it's very much related to the acceleration of the OPEX program we're doing. On the underlying basis, the costs are developing slightly ahead of plan, given the fact that we've had a consolidation of the Savoy portfolio which increases the cost base for 2026 by about 300 million, which would take our cost target for the year to around 12 billion. Right now we're trending slightly below that and we expect to end the year below the 12 billion level. On the net financial expense, it is now coming down on an underlying basis. If you look at the cash component of it, that is obviously driven by the capital raise and the asset sale, which reduces the debt level. So we're seeing a positive impact there. That positive impact should be a bit larger going forward as the liquidity management in the quarter hasn't been optimal due to the fact that we've done tenders and bought back bonds so we've had to hold more liquidity on deposit accounts rather than to fully use the capital to reduce the debt so we should see further tailwinds on the cash component of the net financial expense in Q4 and onwards marginally offset with the higher interest rates which is only affecting our RCF and not the other debt as the other debt is on a fixed coupon basis. And then you can see that there's been a few one-offs on the net financial expense mainly related to the bond backs that we did for 27 that were bought back above 100. So there's a negative effect there and then we pay the consent fee to the RCF holders when we did the asset sale which also has a negative effect. Move to the next page, which is on the servicing income. Johan has gone through most of the things here with the negative development on the external income. But at the same time, we've had good cost control, which means that the margin is stable in terms of the 12-month outlook. But year on year, we see an improvement of the margin going from 22% to 24% this quarter. Moving to the investing P&L. There's a pretty large decrease if you look at the adjusted EBIT. And that is very much related to the consolidation of Savoy, which typically seasonally has a very weak Q3. Cost level in Savoy is just over 100 million in Q3 with income being less than that. So there's actually a negative contribution for Savoy. That typically changes quite a bit in Q4, where Savoy has its seasonally strongest quarter, and we expect the cost level to be approximately the same in Q4, but with income and collections more than doubling. So the negative effect we have in Q3 from this consolidation would reverse in Q4 and be a positive effect instead. Here we should also mention that the EBIT is stronger compared to last year, very much related to the asset sale of the Oren portfolio that led to a capital gain of about 430 million. On the portfolio investments that Johan mentioned, which is 617 in the quarter, We think the outlook looks pretty good for Q4 and we expect to be able to be above that level with similar levels of returns in the next quarter. That's going to be dependent on one or two deals that could be binary, but assuming that everything goes according to plan, we expect to be able to improve volumes further. And then on the cost development on the next slide, obviously we've had a good development over the past couple of years with personal expenses coming down by 20% and other costs by 14%. We are obviously continuing to work on this. We expect this development to continue and accelerate a bit in 2027 compared to development we've seen in 2026. You can already see in the Q3 numbers that there is a slightly larger decline of the FTE base in Q3 versus what we've seen the last couple of quarters. that should accelerate further going forward. This has led to some restructuring costs that we've taken in Q3, and we expect these costs to be clearly higher in Q4, which will enable us to transform the business faster. And again, we will come back with further details, but the plan is to approach about towards 11 billion in total cost in 2027. And then if I summarize the quarter, obviously the main priority for us as a company is to deliver. We are doing that right now. Obviously help with the capital raise and the asset sale, but going forward the leveraging will be fully driven by the organic development. We've had this large Goodwill write-down in Germany and we are excelling the operational access program. On the servicing side, we continue to see, unfortunately, the negative external income development, mainly driven by UK and Germany. But we are able to offset that by reducing the cost level and therefore keeping the margin largely flat. On the investing side, we see an acceleration of investments. We expect that acceleration to continue. For now, returns are still stable at high levels. We expect returns to come down, but still be at sufficiently good levels for us to do these investments. With that, we'll stop and open up for Q&A.