Intrum: Concern Over The Business Fundamentals

2025-04-25 07:35:35 ET

Summary

• Revised servicing forecasts for Intrum reflect a slower recovery, with negative sales in recent years and poor performance in Southern Europe due to increased competition and lower NPL growth.
• Banks' supportive balance sheets and lack of pressure to offload non-performing assets add uncertainty to Intrum's sales and margin growth prospects.
• Debt restructuring expected by H1 2025 may ease short-term liquidity but doesn't significantly reduce overall leverage, maintaining ITJTQ at a warranted discount.

Following our last Intrum AB ( ITJTQ ) update released after the Q2 earnings season, we are back to comment on the company's financials and 2025 expectations. After the Cerberus deal, our pro forma leverage came in above 4x, and continuing to report weakness in investing & servicing margins, we preferred to remain on the sidelines. Additionally, we noted how incremental cost savings were insufficient to complete a turnaround with a risk/reward profile skewed to the downside. Since our last update, Intrum shares have further declined by >30% (Fig 1), and even if there are a few positives to report, we remain equal-weight as we continue to see the business as fragile....

Read the full article on Seeking Alpha

For further details see: