DGAP-News: GRENKE AG / Key word(s): Miscellaneous
GRENKE accelerates growth: Another strong increase in new leasing business
Baden-Baden, July 5, 2022: GRENKE AG, a global financing partner for small and medium-sized enterprises, generated new leasing business of EUR 587.4 million in Q2 2022, exceeding the level in the same prior-year period by 47.4% (Q2 2021: EUR 398.6 million). GRENKE thereby accelerated its year-on-year quarterly growth in new leasing business for the third consecutive time. In Q4 2021, growth was 22.1%, and in Q1 of this year, 36.5%.
"This result confirms our expectation of our return to a stable, sustainable growth path," commented Michael Bücker, Chair of the Board of Directors of GRENKE AG. Dr Sebastian Hirsch, Chief Financial Officer of GRENKE AG, adds: "Our business remains highly profitable. Firstly, this results from the strong increase in our new business, leading to a significant increase in the contribution margin. Secondly, we will pass on the higher interest rate level – as we have always done in the past phases of interest rate increases – with a manageable time lag in the market."
In the DACH region, GRENKE generated new leasing business in Q2 2022 of EUR 139.9 million, or 26.0% above the level in the same prior-year quarter (Q2 2021: EUR 111.1 million). In Western Europe without DACH growth of 36.5% was recorded for the same period. The Southern Europe region saw the strongest increase in new business, rising 73.0% compared to the same prior-year period. In Northern and Eastern Europe, GRENKE recorded growth in new leasing business of 63.0%. Other regions achieved an increase of 56.8% compared to the same prior-year quarter.
In the reporting quarter, GRENKE received a total of 138,261 lease applications, representing a significant increase over the same period in the prior year (Q2 2021: 117,387). Demand for leasing products thereby continued to increase, even in the face of the current uncertain economic environment. GRENKE concluded a total of 72,192 new lease contracts in the reporting period, corresponding to a conversion rate of 52%. In Q2 2021, 56,078 lease contracts had been concluded at a conversion rate of 48%.
The receivables business within the factoring business, accounting for 1.3% of the total assets (as of the March 31, 2022 reporting date), generated a new business volume of purchased receivables in the reporting quarter of EUR 191.5 million, corresponding to year-on-year growth of 9.3% (Q2 2021: EUR 175.2 million). The average maturity of these receivables is six weeks. While new factoring business in Germany declined by 25.0% to EUR 42.3 million (Q2 2021: EUR 56.4 million) as a result of Covid-related extraordinary effects and the reorganisation of sales activities, it increased by 25.6% to EUR 149.2 million in the international markets after EUR 118.8 million in the same quarter of the prior year. GRENKE Bank's new lending business increased by 123.0% to EUR 13.6 million in Q2 2022 (Q2 2021: EUR 6.1 million).
Development of contribution margin in new leasing business
The strong new leasing business resulted in contribution margins increasing significantly above the previous year's level. Contribution margin 2 (CM2) in Q2 2022 increased 29.2% compared to the same prior-year quarter (EUR 72.1 million) and amounted to EUR 93.2 million. At EUR 61.4 million, contribution margin 1 (CM1) in Q2 2022 was 30.1% higher than the level recorded in the same quarter of the prior year (EUR 47.2 million).
The CM2 margin reached 15.9% in Q2 2022. The new business upon which the CM2 margin is based could already compensate for two-thirds of the interest rate increase in the second quarter, resulting in a CM2 margin that is now just one percentage point below the target figure of 17.0%. In the months ahead, we will continue to systematically apply this adjustment process to new business. The CM2 margin is only temporarily below this target as the passing on of interest rate increases in individual markets is a process that usually takes one quarter to complete. The same applies to the CM1 margin, which at 10.4% in Q2 2022 was below the same prior-year period (Q2 2021: 11.8%).
In the same prior-year quarter, the CM2 margin was exceptionally high at 18.1% as new business was being driven by Covid and specifically limited to the highest-margin customer segments for precautionary reasons. In 2019, the year before the Corona crisis, the CM2 margin was 17.0%. The existing business is refinanced at matching maturities and therefore based on an earlier, lower interest rate level.
Overview of new business development (in EUR millions)
*Regions: DACH: Germany, Austria, Switzerland
Western Europe without DACH: Belgium, France, Luxembourg, 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, USA
The half-year financial report will be published on August 11, 2022.
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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 Group operates in 33 countries and employs more than 1,800 staff (measured in terms of full-time equivalents) worldwide. GRENKE shares are listed on the Frankfurt Stock Exchange (ISIN DE000A161N30).
05.07.2022 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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