A $238 million impairment as a result of low purchase volumes by its European division darkened the financial results for Encore Capital Group this week, but the company says it is poised to capitalize on a number of economic and market conditions that are in its favor for 2024.
For all of 2023, Encore reported a net loss of $206 million, compared with a profit of $194 million in 2022. For the fourth quarter of 2023, the company reported a net loss of $271 million, up from a net loss of $73 million during the fourth quarter of 2022. Revenue was down 13% year-over-year to $1.2 billion and the total amount the company collected in 2023 was 3% lower than a year earlier, at $1.86 billion.
On the bright side, though, the company’s volume of portfolio purchases was $1 billion during 2023, up 34% from 2022.
Having a larger pool of debts to collect from at a time when consumers are showing signs of financial stress is more than enough to give Encore’s executives reasons to be bullish about its performance in 2024. Ashish Masih, Encore’s chief executive, said the company sees “no signs” of a slowdown in the favorable purchasing environment that exists right now in the debt buying market.
To help handle the expected influx in collections, Encore’s U.S. operations — Midland Credit Management — added 500 account managers to its ranks in 2023. But where the company is most excited is in the area of its digital collection efforts. Masih said during a call with investment analysts this week that more than 90% of consumers who responded to some form of communication from Midland did so via the company’s online portal. The number of customers who make their first payment using the digital channel has doubled during the past four years, Masih said.
