DGAP-News: GRENKE AG: Solid new business growth recorded in the second quarter of 2019

Solid new business growth recorded in the second quarter of 2019

- Increase of 22.7% in new business at the GRENKE Group in the first half of 2019
- Full-year forecast for growth of Leasing new business confirmed at a range of 14% - 19%
- Contribution margin 2 stable in the first half-year accompanied by an adjustment to risk provisions
 

Baden-Baden, July 2, 2019: In the second quarter of 2019, the GRENKE Group successfully built on the strong growth of the first quarter. Compared to the same quarter of the previous year, the acquired volume - defined as the total acquisition costs of newly purchased leased assets - increased by 20.6% to EUR 734.6 million versus EUR 609.2 million. In the first half of 2019, Leasing new business totalled EUR 1,404.9 million (prior-year period: EUR 1,158.4 million), corresponding to an increase of 21.3%. New business at GRENKE Group Factoring continued to benefit from the strong growth at international franchise partners. Total purchased receivables at GRENKE Group Factoring in the reporting quarter increased by 37.3% to EUR 163.1 million (prior-year period: EUR 118.8 million) and in the six-month period by 29.6% to EUR 305.5 million (prior-year period: EUR 235.6 million).

"We continued our growth course in the first half of 2019," says Antje Leminsky, Chair of the Board of Directors of GRENKE AG, in her comments on the half-year results. "We have reinforced our international presence with three more cell divisions, which took place in Belgium, Canada and Spain. In view of our strong new business growth over the past few years and the resulting high comparative base, and despite the dampened international outlook in terms of economic forecasts, we remain by our expectations for new business growth in leasing of 14 to 19 percent for the year."

The contribution margin 2 (CM2) in the Leasing segment increased by 13.6% to EUR 233.0 million in the 2019 six-month period after recording EUR 205.1 million in the same period of the previous year. At 16.6%, the CM2 margin held steady in comparison to Q1 2019 (6M-2018: 17.7%). The Leasing segment's CM1 margin (contribution margin 1 at acquisition values) stood at 12.2% in the first half of 2019, compared with 12.8% in the same prior-year period and reached EUR 171.7 million compared to EUR 148.3 million.

"The forecast for expected losses and risk provision is a fundamental component of our CM calculation, which we regularly review based on various external and internal data. We adjusted this component for new business at the end of the second quarter, combining this with more restrictive and even more risk-adjusted conversion rates and pricing, also due to the general rise in macroeconomic uncertainty. Accordingly, the CM2 development reflects our cautious calculation and the adjustment in expected losses in all markets. For this reason, the Leasing segment's CM2 in the first half of 2019 was not able to fully maintain the level recorded in the fourth quarter of 2018," said Sebastian Hirsch, member of the Board of Directors of GRENKE AG.

The number of contracts concluded with eSignature increased by 28.8% in the first half of 2019 (6M-2019: 37,819; 6M-2018: 29,375). This innovative product that enables lease contracts to be processed entirely electronically has already helped conclude a total of 156,541 contracts since its launch in 2015. eSignature has also been available in the Australian market since the second quarter, making it available in 20 countries.

In the first half of 2019, the GRENKE Group was again able to gain share in all three core leasing markets. Growth of +20.7% was generated in France, +11.5% in Italy and +14.3% in Germany. Strong growth was achieved in all regions outside of the three core markets, which again highlights the country diversification strategy and GRENKE's independence from any individual markets. "The necessary increase in conditions following the discontinuation of the special write-off programme in Italy at the turn of the year has gone well and, as a result, the contribution margins in Italy in the second quarter were at the same level as at the end of last year as expected. In Italy, we had already adjusted the risk provisions in the contribution margin in 2018," commented Sebastian Hirsch on the development in Italy.

In the January through June period, the GRENKE Group recorded a total of 316,645 lease applications (264,875 thereof were international), which generated 157,813 new lease contracts (128,643 thereof were international). The mean acquisition value per lease contract was EUR 8,902 (6M-2018: EUR 8,575) and remained at the level typical for the business. The conversion rate (applications into contracts) in the GRENKE Group's leasing business was 50%. In international markets, 49% of applications were converted into contracts. At 56%, the highest conversion rate continued to be generated in the DACH region. The diversification strategy is also reflected in the customer portfolio, where the share of customers operating in the medical sector represented 14.4% of new business growth.

In the Factoring segment, new business volume increased by 29.6% to EUR 305.5 million in the first six months of the current fiscal year (6M-2018: EUR 235.6 million). The gross margin on new business volume of EUR 84.9 million achieved in Germany remained at a high level of 1.60% (6M-2018: 1.62%). In international markets, the gross margin on new business volume of EUR 220.6 million was 1.41% (6M-2018: 1.20%). This margin is based on the average period for a factoring transaction in Germany of roughly 29 days (6M-2018: approx. 27 days) and approximately 42 days on an international level (6M-2018: approx. 40 days).

In the second quarter, GRENKE Bank's lending business for small and medium-sized enterprises (including business start-up financing) recorded an even stronger increase than in the first quarter of the year and reached 26.8% for the six-month period. In absolute terms, the volume as per June 30, 2019 amounted to EUR 23.7 million compared to EUR 18.7 million in the same period of the previous year. The deposit volume of GRENKE Bank increased by 29.3% and amounted to EUR 769.9 million as per June 30, 2019, following EUR 595.6 million at the end of the first half of 2018.

Following the announcement made by Deutsche Börse in early June 2019, GRENKE AG's shares entered the MDAX on June 24, 2019.
 

Overview of new business development (in EUR millions)
 

	6M-2019	6M-2018	Change in %
New business GRENKE Group Leasing	1,404.9	1,158.4	21.3
- of which international	1,068.8	871.4	22.7
- of which Franchise international	39.6	26.5	49.4
- of which DACH*	296.5	260.5	13.8
Western Europe(without DACH)*	372.9	305.2	22.2
Southern Europe*	442.6	371.1	19.3
Northern/Eastern Europe*	233.4	183.4	27.3
Other regions*	59.4	38.2	55.4

 

 

	6M-2019	6M-2018	Change in %
New business GRENKE Group Factoring	305.5	235.6	29.6
- of which Germany	84.9	85.5	-0.7
- of which international	81.3	67.9	19.8
- of which Franchise international	139.3	82.3	69.3
GRENKE Bank
Deposits	769.9	595.6	29.3
New business SME lending business (incl. business start-up financing)	23.7	18.7	26.8
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing	233.0	205.1	13.6
- of which international	184.0	162.6	13.2
- of which Franchise international	8.3	5.6	48.6
- of which DACH*	40.7	36.9	10.3
Western Europe(without DACH)*	64.9	54.8	18.4
Southern Europe*	72.7	71.2	2.0
Northern/Eastern Europe*	42.1	34.2	22.8
Other regions*	12.6	7.9	60.3

 

* Regions: DACH: Germany, Austria, Switzerland
Western Europe (without DACH): Belgium, France, Luxembourg, the Netherlands
Southern Europe: Croatia, Italy, Malta, Portugal, Slovenia, Spain
Northern/Eastern Europe: Denmark, Finland, Ireland, Latvia, Norway, Sweden, UK / Czechia, Hungary, Poland, Romania, Slovakia
Other Regions: Australia, Brazil, Canada, Chile, Singapore, Turkey, UAE

The Company will publish its financial report for the second quarter and first half-year of 2019 on July 30, 2019.

For more information, please contact:

GRENKE AG
Investor Relations Team

Neuer Markt 2
76532 Baden-Baden
Phone: +49 7221 5007-204
Email: [email protected]
Internet: www.grenke.de/grenke-group

About GRENKE

The GRENKE Group (GRENKE) is a global financing partner for small and medium-sized companies. As a one-stop shop for customers, GRENKE's products range from flexible small-ticket leasing and demand-driven bank products to convenient factoring. Fast and easy processing and personal contact with customers and partners are at the centre of GRENKE's activities.

Founded in 1978 in Baden-Baden, the Company operates in 32 countries and employs more than 1,600 staff worldwide. GRENKE shares are listed in the MDAX on the Frankfurt Stock Exchange (ISIN DE000A161N30).

Further information about GRENKE and its products is available at www.grenke.de/grenke-group.