STOCKHOLM (Reuters) - Intrum (INTRUM.ST), Europe’s biggest debt collector, reported on a 66% drop in first-quarter profit hit by a writedown and weaker credit management in southern Europe but a mostly stable performance so far this quarter.
The Swedish group’s operating profit tumbled to 459 million crowns ($46.8 million) from 1.35 billion a year earlier partly due to a 636 million writedown on holdings at its Portfolio Investments division.
The division buys portfolios of overdue debts and then collects them. Intrum said the revaluation reflected expectations of lower collections in 2020 due to the impact of COVID-19.
Intrum’s shares were down 2% in early trade and are off 51% year to date.
Its credit management operations in France, Greece, Italy, Portugal and Spain saw sales and margins fall in March reflecting government efforts to stem the pandemic that caused legal systems to partially close and people to stay at home.
“We expect to see increased opportunities to recover this loss of revenue when the situation normalises,” the company said regarding the unit that manages credit in Italy, Spain and Greece which saw sales fall 35% before acquisitions.
In most of the 24 markets where Intrum has credit management operations, however, performance was stable in the first quarter - and also so far in the second quarter, it said.
“We believe that this development supports our ambition for a sideways development of our adjusted operating income in the second quarter,” it said.
“We expect Southern Europe to gradually open up their legal systems from the summer months and we then see conditions for a generally more positive market outlook combined with pent-up demand among our clients to accelerate portfolio sales.”
Reporting by Anna Ringstrom; editing by Mark Potter and Jason Neely