- Consolidated Group net profit rises 27.7% to EUR 103.2 million
- Proposed dividend of EUR 1.75 per share
- Further growth in 2017: Expected increase of 11-16% in new business in Leasing and 12-20% in Factoring; expected Consolidated Group net profit of EUR 113-123 million
Baden-Baden, February 8, 2017: The past fiscal year was another year of profitable growth for GRENKE. This is clearly demonstrated by the 27.7% year-on-year increase in the Consolidated Group net profit to a new record value of EUR 103.2 million after the EUR 80.8 million generated in the previous year. This amount also fully met our net profit forecast of EUR 98 –102 million (previous forecast EUR 93 – 98 million), which had been raised at the publication of our half-year report.
We continued to profit from the strong, high-margin new business acquired in recent years and from the persistent low level of interest rates. Our interest and similar income from the financing business increased 9.2% from EUR 239.0 million in the previous year to EUR 261.0 million. Expenses from interest on refinancing declined 9.7% from EUR 47.8 million to EUR 43.2 million and led to a rise in net interest income of 13.9% from EUR 191.2 million in the previous year to EUR 217.8 million.
Our losses in the reporting year fell 7.2% from EUR 59.4 million in the previous year to EUR 55.1 million as a consequence of our active, risk-oriented margin management. The resulting net interest income after settlement of claims and risk provision amounted to EUR 162.7 million compared to EUR 131.8 million in the previous year for a rise of 23.4%. The Consolidated Group’s loss rate amounted to 1.2% after 1.5% in the previous year.
We also had gratifying increases in our profit from the service business and profit from new business. The solid new business development during the past reporting year led to an increase of 17% in each of these items. Taking into account the traditionally volatile gains/losses from disposals, which contributed a loss in 2016 (losses from disposals), the Consolidated Group’s income from operating business increased 18.4% from EUR 232.1 million in the previous year to EUR 274.8 million.
The average number of employees at the GRENKE Consolidated Group continued to rise in 2016, alongside our strategic expansion, and ended the year 11.1% higher at 1,031 employees, which is equivalent to the creation of 103 new jobs. The higher number of employees resulted in an 11.8% increase in total compensation, which is defined as the sum of both variable and fixed staff costs. On an absolute basis, total compensation equalled EUR 70.6 million compared to EUR 63.2 million in the previous year.
Selling and administrative expenses, another key expense item for the Consolidated Group, grew 10.8%. This rise was triggered by the growth-related rise in costs for operations, sales and administration, as well as IT project costs, which have increased considerably in the course of our system’s continued expansion. The operating result exceeded the previous year’s amount of EUR 109.3 million by 24.9% and reached EUR 136.5 million. Based on the Consolidated Group’s record net profit mentioned above, earnings per share for the 2016 fiscal year amounted to EUR 6.87 compared to EUR 5.43 in the previous year.
The Consolidated Group continues to maintain a solid financial position as per the December 31, 2016 reporting date. At 17.4%, the equity ratio was slightly higher than its level of 17.0% at the end of the 2015 fiscal year and was also above our long-term target level of a minimum of 16%.
In view of the favourable business performance in 2016 and the continued positive outlook, the Supervisory Board and the Board of Directors plan to propose a dividend of EUR 1.75 per share to the Annual General Meeting on May 11, 2017. In the previous year, the Company paid a dividend of EUR 1.50 per share.
"Our value-based business model proved itself very well once again in 2016. Thus, we achieved a 16% increase in GRENKE Group’s new business amid a challenging economic environment. This allowed us to continue to maintain a growth rate that is significantly higher than our medium-term growth target of at least 12% per year. We expect GRENKE Group’s new business volume to significantly exceed the EUR 2 billion threshold in 2017.
GRENKE remains exceptionally positioned for continued profitable growth. After slightly surpassing our net profit forecast, which had been raised with the publication of the half-year report, and achieving a 27.7% increase in the Consolidated Group net profit to EUR 103.2 million, we expect net profit in the current fiscal year to reach between EUR 113 and 123 million", explained Wolfgang Grenke, Chairman of the Board of Directors of GRENKE AG, in his summary of the development in the past fiscal year.
Sebastian Hirsch, member of the Board of Directors of GRENKE AG, added: "We see our international presence as a key success factor. After opening a total of nine new locations in 2016, we will follow up in the current fiscal year with further cell divisions in our existing markets. We also plan to gain a foothold in Australia with our leasing products and roll out our factoring offers in Italy. In view of our solid equity base and the Consolidated Group’s diverse refinancing options we are ideally positioned to refinance our upcoming growth at attractive conditions".