- Cost-income ratio continues to improve
- At EUR 78.8 million, operating result rises by 18.5% year-on-year
- Consolidated Group full-year outlook for net profit increased to a range of EUR 118 to 124 million (previous outlook: EUR 113 to 123 million)
Baden-Baden, July 28, 2017: The first half of the current fiscal year was very satisfactory. The GRENKE Consolidated Group’s net profit increased 19.0% to EUR 59.0 million. This compares to EUR 49.6 million generated in the six month period of the prior year. Growth continued to be driven by the recent acquisition of a high level of profitable new business and an improved cost-income ratio. For the first time, costs accounted for less than 50% of operating income. Earnings per share increased from EUR 3.30 to EUR 3.90 based on the number of shares prior to the stock split and from EUR 1.10 to EUR 1.30 based on the higher number of shares after the stock split, which was executed on July 10, 2017.
"GRENKE continued to develop successfully in the first half of the year. The GRENKE Group not only achieved a higher-than-expected level of new business in the first six months, which led us to increase our growth forecast for new business in the Leasing segment, but we are also seeing broad-based growth in our income. As a result, we have also increased our expectations for the Consolidated Group’s net profit and now expect it to reach a range of EUR 118 to 124 million compared to our previous expectation of EUR 113 to 123 million. We are very confident that we will be able to continue our profitable growth throughout the second half of the year", said Wolfgang Grenke, Chairman of the Board of Directors of GRENKE AG, in his comments on GRENKE's development in the first six months and the outlook for the 2017 fiscal year.
Based on the calculation of the contract portfolio, net interest income improved by 13.1% to EUR 119.9 million in the first half of 2017 compared to EUR 106.0 million in the first half of the previous year. In addition, the Consolidated Group’s loss rate improved to 1.0% compared to 1.3% in the same period of the prior year. This improvement was also reflected in the expenses for claims and risk provision, which declined by 4.7% from EUR 28.3 million in the previous year to EUR 27.0 million. Net interest income after settlement of claims and risk provision increased thereby from EUR 77.7 million in the previous year to EUR 93.0 million, which is equivalent to a rise of 19.6%.
Profit from service business also developed positively, increasing 17.4%. As costs rose at a slower rate than income, there was a corresponding decline in capitalised costs. The income resulting from the capitalisation of costs is a key component of the profit from new business, which, as a result, also increased by a disproportionally low 12.1%. Taking into account the somewhat volatile gains and losses from disposals – which was negative in the first half-year (loss from disposals) – the Consolidated Group’s income from operating business rose 14.5% from EUR 134.3 million in the same period of the previous year to EUR 153.7 million.
Staff costs, which is one of the Consolidated Group’s major expense items, increased by 19.6%. This rise resulted from the higher average number of employees as per the reporting date which amounted to 1,182 (June 30, 2016: 991 employees). Nevertheless, the percentage rise in staff costs continued to fall below the growth rate of new business.
Selling and administrative expenses were lower compared to the previous year, falling by 6.0%. Overall, total expenses grew visibly slower than income, yielding an operating result of EUR 78.8 million compared to EUR 66.5 million in the previous year, which represents an increase of 18.5%.
"GRENKE is on a growth path, and solid key financial ratios and a targeted refinancing strategy are needed to ensure this continues. In addition to GRENKE Bank’s deposit business, we rely on a variety of instruments that we use flexibly according to our funding needs and requirements. Our good credit ratings once again made a significant contribution to our success on the refinancing side. In its latest analysis, the credit rating agency Standard & Poor’s reconfirmed GRENKE’s investment grade rating of BBB+ with a stable outlook," said Sebastian Hirsch, member of GRENKE AG’s Board of Directors, in his comments on the Consolidated Group’s successful refinancing.