KRUK Spólka Akcyjna (KRU) Q4 2024 earnings summary

Executive summary

• Net profit for 2024 reached PLN 1.1 billion, up 9% year-over-year, marking the highest in company history, with EPS at PLN 55.54 (+9% y/y), though slightly below expectations due to Spanish operations.

• Strong performance in Italy, Poland, and Romania offset challenges in Spain, with international operations contributing 62% of investments and 59% of recoveries.

• Cash lending business (Wonga and Novum) contributed over PLN 100 million EBITDA, with Wonga's EBITDA up 22% y/y and plans for expansion.

• Recoveries from purchased portfolios rose 15% y/y to PLN 3.5 billion, while investments in new portfolios declined 5% y/y to PLN 2.8 billion.

• KRUK maintained a strong market position in Poland, Romania, Italy, and Spain, and was recognized with multiple stock market and ESG awards in 2024.

Financial highlights

• Revenue increased 12% y/y to PLN 2.9 billion, driven by higher recoveries and interest income.

• Cash EBITDA rose 13% y/y to PLN 2.4 billion; operating expenses grew 19% y/y, mainly due to higher court fees and employee costs.

• Net profit margin was 37% in 2024, with return on equity (ROE) at 24% (LTM) and portfolio carrying amount up 21% y/y to PLN 11 billion.

• Net debt/cash EBITDA was 2.7x (vs. 2.4x in 2023); net debt/equity remained stable at 1.4x.

• Finance costs rose 39% y/y, mainly due to higher debt and EURIBOR rates, partially offset by interest rate hedges.

Outlook and guidance

• 2025–2029 strategy targets PLN 15 billion in new portfolio investments, doubling portfolio carrying amount to PLN 20 billion, and maintaining ROE near 20%.

• Planned investments for 2025 are around PLN 2.5 billion, a decline from the previous year but still supporting balance sheet growth.

• Leverage expected to stabilize or decrease over the next few years, with net debt/cash EBITDA targeted below 3.0x.

• Optimism for positive revaluations in Poland and Romania; cautious on Spain due to legal uncertainties.

• Management sees no circumstances threatening the Group's going concern status for the next 12 months.