It has been both surprising and unsettling to see how quickly people are abandoning the financial wisdom they have demonstrated during the pandemic. We think their ability to repay debts has improved, but people’s willingness to do so appears to have deteriorated significantly after vaccinations were put in place and society reopened this summer, CEO Johnny Solis says in the stock exchange announcement.
Decreased willingness to pay
Operating profit before depreciation and amortization (EBITDA) was €10 million in the quarter, compared to €30 million in the corresponding quarter last year. EBITDA was €51 million in the quarter, compared to €56 million in the corresponding quarter last year. The total turnover amounted to 78 million euros in the quarter, compared to 83 million euros in the corresponding quarter of last year. The return on equity for the quarter ended at negative 3.3 percent.
Simply put, private consumption has been prioritized over debt repayment. This weakened Axactor’s third-quarter result, but ironically enhances our outlook as increased depreciation is expected to create larger volumes of bad debt in the future, Johnny Solis says in the report.
| Euro Mill. | 3.kv/21 | 3.kv/20 |
| total turnover | 78,1 | 83.3 |
| Gross income | 46.7 | 62,3 |
| EBITDA | 10.4 | 30,3 |
| Result before taxes | -5,0 | 12,3 |
Increase Portfolio Purchases
The pandemic has sent investments in distressed portfolios significantly lower than usual, and in the second quarter there were historically low purchases of the Axactor portfolio. During the third quarter, portfolio purchases rebounded somewhat and Axactor bought 32 million euros in distressed portfolios. This means that Axactor has so far this year bought distressed wallets for €60m.
Axactor expects investments in non-performing loans to increase beyond the maintenance level in the coming quarters, but it remains in line with the group’s strategy and at attractive rates. If portfolio rates become too high, Axactor will prioritize debt reduction over investments in non-performing loans.
Despite the poor result in the third quarter, we are pleased that investments in non-performing loans are picking up again after the bottom line we saw in the second quarter. At the same time, the limit on the covenants in our bond loans has been raised. Johnny Solis adds, “We will continue to practice price discipline and invest only in portfolios that are attractively priced and that fit in with our strategy.”
At the end of the second quarter, the estimated investment capacity of Axactor amounted to 550 million euros. CEO Johnny Solis told Finansavisen in August that having coffers full of cash isn’t necessarily a competitive advantage in the industry right now.
“Everyone has a lot of investment capacity now. What matters is finding the right portfolios,” Solis said.
- Debt collection agency in the context of debt collection and portfolio acquisition activities headquartered in Skøyen, Oslo.
- The CEO is Johnny Solis.
- Chairman Glen Ole Rødland was elected in the spring of 2020, and the largest shareholder is Geveran Trading, which is controlled by John Fredriksen.
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