B2Holding ASA: First quarter 2020 results

B2Holding reports stable gross cash collection in first quarter 2020

“During the first quarter, our macroeconomic environment significantly changed with the Covid-19 outbreak. We saw the strength in our organization and its ability to ensure business continuity and limit the operational impact in a challenging situation, and I am glad to report a stable cash collection in the first quarter. Still, we prepare our response to the Covid-19 pandemic by targeting cost reductions and reduce portfolio purchases to a minimum,” said Erik J. Johnsen, CEO of B2Holding ASA.

B2Holding had total operating revenues of EUR 67 million in the first quarter, a decrease of 3 per cent from the same quarter last year.

Gross cash collection increased by 5 per cent to EUR 114 million, and cost to collect was down 1.1 percentage points (compared to Q4 2019) to 22.9 per cent in Q1 2020. Going forward, the Group will focus on improving efficiencies combined with targeted cost reductions as a response to the Covid-19 pandemic. As of now, these cost reductions amount to approximately EUR 1,7 million per month starting from April.

The impact on collections have been modest during the first quarter, as March was the first month where the effects of the Covid-19 pandemic became visible.

Cash EBITDA was EUR 84 million, an increase of 0.2 per cent compared to the first quarter 2019, while operating profit (EBIT) was reduced by 27 per cent to EUR 22 million.

Investment in new purchases of loan portfolios in the first quarter amount to EUR 43 million (down 13.9% compared to same period last year). They were mainly in Northern Europe (70%), followed by Poland (12%), South-East Europe (10%) and Western Europe (9%).In the first quarter 97 % of all the purchases were in the unsecured portfolios. The total gross ERC is marked by the currency fluctuations and was approximately EUR 2.28 billion at end of quarter, up 24 % compared to first quarter 2019.

From regional perspective – the Southeast European market investment in new portfolio purchases reached 4 mln. EUR which is growth of 20,5% compared to same period last year. There was 23,5% increase in the portfolio purchases in Western European markets (Spain, Portugal, France, Italy), totaling EUR 3,6 mln. The largest investments were done in the Northern European region – EUR 30 mln., while no acquisitions were made in the Central European countries.

The Group expects the macroeconomic environment to worsen due to the Covid-19 pandemic. Consequently, collections are expected to be reduced in the short to mid-term. There is still limited visibility on the actual net effect on collections, and thus a need to collect more data over a longer period in order to observe trends and evaluate the effects of Covid-19 on the cash flow. By end of Q1 the overall impact of the pandemic is estimated as medium. However it is ranging from high for the most affected markets – Italy and Spain, to low for Poland and the countries in Northern Europe.

Although the short-term market outlook is uncertain, the Group believes that the NPL volumes coming to the market post the crisis will increase, causing a potentially positive effect on pricing of portfolios and increased yields.