- New business at GRENKE Group Leasing increases 21.7% in the first nine months resulting in a slight increase in the full-year forecast to 18% - 21% (prior forecast: 16% - 19%)
- Contribution margin 2 in the third quarter equals 17.1% after a level of 16.6% in the second quarter
- GRENKE and KfW sign an agreement for another new global loan in the amount of EUR 200 million
Baden-Baden, October 2, 2019: In the third quarter of 2019, the GRENKE Group continued the growth recorded in the first half-year while raising its CM2 margin. 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 22.7% from EUR 559.7 million to EUR 686.8 million. Leasing new business in the first nine months of 2019 totalled EUR 2,091.7 million (prior-year period: EUR 1,718.1 million), corresponding to a rise of 21.7%. New business at GRENKE Group Factoring continued to benefit from the strong growth of the international franchise partners. Total purchased receivables in the reporting quarter rose by 30.4% to EUR 170.2 million (prior-year period: EUR 130.6 million) and in the nine-month period by 29.9% to EUR 475.7 million (prior-year period: EUR 366.2 million).
"We are very pleased with the year-to-date performance of our new business. After exceeding our growth expectations in the first three quarters of 2019, we are raising our forecast for new business growth in Leasing from 16% to 19% to 18% - 21%, remaining firmly on track for the 2019 fiscal year," says Antje Leminsky, Chair of the Board of Directors of GRENKE AG. "In the first half of 2020, we intend to further expand our international footprint by opening a new franchise company in Arizona, USA. We are confident that our tried and true business model will also be welcomed with a positive response in this market, enabling us to continue to realise our longterm growth potential."
The contribution margin 2 (CM2) at GRENKE Group Leasing increased by 15.6% in the first nine months of 2019 to EUR 350.3 million compared to EUR 303.0 million in the prior-year period. At 16.7% (9M-2019), the CM2 margin increased above the level of 16.6% recorded in the first half-year of 2019 (9M-2018: 17.6%). The Leasing segment’s CM1 margin (contribution margin 1 at acquisition values) stood at 12.3% in the first nine months of 2019 compared with 12.7% in the same prior-year period and reached EUR 258.1 million compared to EUR 218.6 million.
"Not only are we very pleased with the level of our new business growth but also the positive development of our contribution margin. The CM2 at GRENKE Group Leasing increased by 50 basis points sequentially from 16.6% in the second quarter of 2019 to 17.1% in the third quarter of 2019. We are closely monitoring the measures we have implemented to ensure that our contribution margin continues to rise and generate a lasting impact on our income statement and enterprise value," explained Sebastian Hirsch, member of GRENKE AG’s Board of Directors.
The number of contracts concluded with eSignature continued to increase. In the nine-month reporting period, a total of 56,455 contracts were concluded (9M-2018: 42,741) using this innovative offer, which is equivalent to a growth rate of 32.1%. Our eSignature, which was introduced in 2015 and is currently available in 20 countries, enables us to process lease contracts entirely digitally.
The GRENKE Group continued to grow in all three core leasing markets in the third quarter of 2019, with an increase of +25.7% in France, +10.2% in Italy and +23.9% in Germany. In the other major international markets, Spain was particularly strong, recording growth of 34.7%.
GRENKE expanded its successful cooperation with the KfW development bank in the context of another global loan agreement in the amount of EUR 200 million for lease financing. "We are pleased about the successful continuation of our cooperation with KfW, which is an important element in the financing of small and medium-sized enterprises in Germany – particularly during somewhat more difficult economic phases", says Sebastian Hirsch in his comments on the conclusion of the new global loan. "For over 40 years, we have been a reliable financing partner for small and medium-sized companies, and they will be able to continue to benefit from our customary fast and easy processing and favourable terms and conditions."
In the January through September period, the GRENKE Group recorded a total of 454,937 lease applications (376,642 thereof were international), which generated 231,852 new lease contracts (185,964 thereof were international). The mean acquisition value per lease contract was EUR 9,022 (9M-2018: EUR 8,779) and remained at the level typical for the business. The conversion rate (applications into contracts) in the GRENKE Group’s leasing business was 51%. In international markets, 49% of applications were converted into contracts. At 59%, 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 14.5% of new business growth.
In the Factoring segment, new business volume increased by 29.9% to EUR 475.7 million in the first nine months of the current fiscal year (9M-2018: EUR 366.2 million). The gross margin on new business volume of EUR 129.4 million achieved in Germany remained at a high level of 1.57% (9M-2018: 1.66%). In international markets, the gross margin on new business volume of EUR 124.6 million was 1.54% (9M-2018: 1.31%). This margin is based on the average period for a factoring transaction in Germany of roughly 28 days (9M-2018: approx. 27 days) and approximately 42 days on an international level (9M-2018: approx. 40 days).
GRENKE Bank’s lending business for small and medium-sized enterprises (including business start-up financing) in the third quarter recorded an even stronger increase than in the first half-year and growth reached 28.5% in the nine-month period. In absolute terms, the volume as per September 30, 2019 amounted to EUR 37.6 million compared to EUR 29.3 million in the same period of the previous year. The deposit volume of GRENKE Bank increased by 27.9% and amounted to EUR 799.3 million as per September 30, 2019, following EUR 624.8 million at the end of the first nine months of 2018.
The Company will publish its financial report for the third quarter and first nine months of 2019 on October 30, 2019.