Intrum - comment

Almost a side-show for us is that the weak collections environment in Q123 has exposed the high centralised cost base the company built up since 2020 under its One Intrum integration program. What is more interesting is that Intrum appear to have shifted from quantity to quality in their collections philosophy. The Quarterly GMM realised as we calculate it has bounced back from the historic lows it explored in Q422 but at the expense of the overall quantum of collections. Management stated that the opportunity for investing is still some two years away and indicated that Intrum intend to shrink their investment book, taking annual investments from SEK 7-8bn down to SEK 5bn to a stable own book of €2-3bn. We think this should be flattering to Cash EBITDA leverage on the way down, which should help achieve management’s 3.5x goal, but that is not how we look at leverage for these companies.