Axactor SE: Second quarter and half-year 2021 financial results

Axactor SE (Axactor, OSE: ACR) delivered a total income in the second quarter of EUR 65.9 million, up 130% from the same period last year (28.7 million), and an EBITDA* of EUR 22.2 million, a significant improvement versus last year’s second quarter (-30.0 million) as the return towards a normalized business environment continues.

“Improved collections and recovery rates as well as improved cost position within our core business areas have been the key progress drivers this quarter. While the second quarter last year may not be the best benchmark due to the extraordinary situation caused by the global Covid-19 outbreak, we have improved the performance significantly versus the previous quarter. All in all, the second quarter takes us one step closer towards our key financial objective of delivering an attractive return on equity for shareholders,” says Johnny Tsolis, CEO of Axactor.

Axactor delivered a 34% increase in gross revenue* to EUR 95.2 million (70.8). Total income in the second quarter was EUR 65.9 million (28.7), representing an increase of 130%. EBITDA* was EUR 22.2 million (-30.0) and cash EBITDA* ended at EUR 65.7 million (44.4), equivalent to an increase of 48% compared to the corresponding period last year. Operating profit (EBIT) was EUR 19.8 million for the second quarter (-32.6). Net profit ended at EUR 4.4 million (-44.4) including a positive one-off foreign exchange gain of EUR 1.5 million and a negative one-time effect of EUR 0.6 million in write-down of capitalized loan fees.

Operating expenses for the quarter include EUR 0.9 million in restructuring costs related to the cost saving program initiated earlier in 2021. Estimated annual savings from cost saving actions implemented during the first half 2021 is EUR 3.9 million. Expected annual savings when all initiatives are implemented at year-end is EUR 5.2 million.

“Our cost saving program is progressing well, and we realized higher savings than estimated in the second quarter. The program is one of several components to further improve profitability and we expect the cost reduction program to reach full P&L-effect in the fourth quarter this year,” adds Johnny Tsolis.

Axactor’s annualized return on equity excluding non-controlling interests for the second quarter 2021 was 6.9% (-36.1%).

Business segment update
Axactor operates in two main segments: non-performing loans (NPL) and third-party collection (3PC). The real estate owned (REO) segment is treated as a run-off scenario and is expected to steadily decline over time.

NPL gross revenue was all-time high in the second quarter despite marginally declining book value. NPL gross revenue grew 27% to EUR 69.0 million (54.5). The NPL total income grew 221% to EUR 39.7 million from the second quarter last year (12.4). The growth came partially because of higher activity levels as societies are reopening, but also as a result of continuous investments in new NPL portfolios over the last twelve months. In addition, net revalutions for the quarter ended at EUR -1.4 million, compared to EUR -27.0 million for the second quarter 2020. NPL investment was at a historic low of EUR 12.3 million in the second quarter as Axactor continues to strictly prioritize the best deals. Axactor is currently acquiring portfolios at attractive rates, with gross IRR on signed forward flow contracts 47% higher than on the current book. As such, Axactor expect current book gross IRR on non-performing loans to improve over time.

3PC total income grew 34% compared to the second quarter last year, ending at EUR 12.9 million (9.7). The impacts of government-imposed restrictions throughout Europe are still affecting operations, although the impacts are gradually reducing. Several new 3PC deals have been signed during the quarter, including a transformational deal for Axactor in Sweden. The deal establishes Axactor as a serious contender in the Swedish 3PC market, a market where Axactor has previously held a very small market share.

Outlook
Going forward, Axactor expects 3PC volume to return to pre-pandemic levels as societies re-open, and to see market activity increase for both 3PC and NPL. The company is strictly prioritizing the best NPL deals and expect NPL investments of approximately EUR 200 million for 2021, depending on market activity in the fourth quarter. However, Axactor will prioritize NPL deleveraging over investments if market prices are perceived as unfavorable.

For the cost savings program initiated in the first quarter 2021, Axactor targets EUR 1.2 million in additional annualized savings by year-end, bringing the total expected annual savings to an estimated EUR 5.2 million.

“Through continued focus on cost efficiency, improving tax rates and lower funding cost, Axactor expects return on equity to increase further over time. Favorable changes to the business mix are also expected to have a positive impact, through growth in the capital light 3PC segment and a decreasing REO portfolio,” concludes Johnny Tsolis.

*EBITDA and other alternative performance measures (APMs) are defined and reconciled to the IFRS financial statements as a part of the APM section on page 34 of the second quarter and half-year 2021 financial report.

Live presentation and webcast
Axactor will present its interim second quarter and half-year 2021 financial results today at 08:30 am (CET). The presentation will take place at Hotel Continental, Stortingsgata 24/26, Oslo at 08.30 (CET). The presentation will be held in Norwegian. For attendance at Hotel Continental please send an e-mail to liv.overby@axactor.com.

In addition, there will be a global investor webcast with a live Q&A session at 10.00 (CET). The webcast will be held in English and can be accessed through the following URL: https://streams.eventcdn.net/axactor/q2-2021/register or through participant dial-in:

Denmark: +4578723250
Norway: +4723500236
Sweden: +46850558355
United Kingdom: +443333009035
United States: +16467224902

For additional information, please contact:

Johnny Tsolis, CEO, Axactor, tel: +47 913 35 461, e-mail: johnny.tsolis@axactor.com
Kyrre Svae, Chief of Strategy & IR, Axactor, tel: +47 478 39 405, e-mail: kyrre.svae@axactor.com

Attachments:
Quarterly Report Q2 2021 (pdf)
Axactor Q2 2021 Presentation (pdf)

About Axactor
Axactor Group is a next-generation debt management company operating in Norway, Sweden, Finland, Germany, Spain and Italy with an ambitious growth strategy. Axactor acquires and collects on own portfolios of non-performing loans and also provides debt collection and accounts receivable management for third parties. After only six years in business, external analysis show that Axactor already has an industry leading cost-to-collect ratio on NPL. The company has approximately 1,100 employees.

To learn more, visit www.axactor.com

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act. This stock exchange announcement was published by Kyrre Svae, Chief of Strategy & IR at Axactor SE, on 17 August 2021 at 07:00 CET.