- GRENKE Group Leasing's new business in the 2020 financial year amounts to EUR 2,027.9 million, equal to 71.2% of the level in the 2019 financial year
- GRENKE Group Leasing's new leasing business in Q4 2020 reaches EUR 426.7 million, equal to 56.3% of the level in Q4 2019
- Contribution margin 2 in Q4 2020 increases to 19.5% (Q4 2019: 17.8%)
- Extension of hybrid bond (ISIN XS1262884171) in the amount of EUR 50 million
Baden-Baden, Germany, January 5, 2021: The GRENKE Group, a global financing partner for small and medium-sized enterprises, generated new leasing business of EUR 2,027.9 million in the past 2020 financial year, despite the COVID-19 pandemic, thereby achieving 71.2% of the previous year’s level (FY 2019: EUR 2,849.1 million). In Q4 2020, GRENKE Group Leasing generated new business of EUR 426.7 million. Leasing new business, defined as the total acquisition costs of all newly purchased leased assets, equalled 56.3% of the level in Q4 2019 and was thus in line with the target of approximately 60%, which had been communicated before the announcement of the second hard lockdown.
"Despite a second hard lockdown, we met our fourth quarter forecast. The start of the COVID-19 vaccinations makes us confident that the restrictions will end soon", says Antje Leminsky, Chair of the Board of Directors of GRENKE AG, in her comments on the fourth quarter of 2020. "The extraordinary year 2020 demanded more patience and perseverance from us than ever before. Together with all GRENKE AG employees, we are mastering the challenges posed by COVID-19 as the SME sector needs us as a strong small-ticket financing partner – especially now as the coming months will prove to be a great challenge for many companies.”
Regional development of new leasing business
In the regional analysis of the leasing markets, the DACH region once again stood out positively in the fourth quarter of 2020 with a 25.2% decline in new leasing business, making it GRENKE’s strongest region. Western Europe without DACH recorded a decline of 46.5% in new leasing business in the current reporting period. At -52.6%, Southern Europe was at a similar level to Northern/Eastern Europe at -51.1%. The other regions from the leasing business recorded a decrease in new business of 27.5%. Overall, the development of new business volume in Q4 2020 compared with the previous year was shaped by the sales activities, which were focused on contribution margins, risk limitation and diversification, as well as small-ticket contracts.
Percentage contribution margin development
As a result of further hard lockdowns due to the COVID-19 pandemic and the associated curtailment of macroeconomic activity and public life, contribution margins also decreased in nominal terms in line with GRENKE Group Leasing's new business volume in Q4 2020. Contribution margin 2 (CM2) of the leasing business amounted to EUR 83.3 million in the fourth quarter of the current financial year (Q4 2019: EUR 134.9 million). The CM2 margin increased to 19.5% (Q4 2019: 17.8%). The strong CM2 margin was made possible, above all, as a result of the consistent focus on the profitable small-ticket business. The mean acquisition value per lease contract decreased further to EUR 7,595 in Q4 2020 (Q4 2019: EUR 9,240). The lower mean value reflects the stronger demand for small-ticket financing solutions from small and medium-sized enterprises. Small-tickets are defined as leases with a volume of between EUR 500 and EUR 25,000.
Contribution margin 1 (CM1) in the fourth quarter of 2020 reached EUR 56.0 million (Q4 2019: EUR 96.1 million), registering a decrease of 41.7%. The CM1 margin, however, improved to 13.1% (Q4 2019: 12.7%). The increase in the margin successfully cushioned the higher refinancing costs contained in the leasing conditions.
Regional development of contribution margins
The DACH region was less affected in the fourth quarter of 2020, with a decline in contribution margin 2 of 24.6%. In line with new business development, the regions Western Europe without DACH (-38.8%), Southern Europe (-45.2%), and Northern/Eastern Europe (-44.8%) were most affected by the current cross-border restrictions.
The GRENKE Group received a total of 115,260 lease applications in the fourth quarter of 2020. Of these, 21,351 applications were made in the DACH region and 93,909 applications in international regions. At the Group level, 56,182 new lease contracts were concluded from these applications, corresponding to a conversion rate of 49%.
Development of factoring business
With a purchased receivables volume of EUR 180.0 million, GRENKE Group Factoring's new business recorded a decline of 4.1% compared to the same period in the previous year (Q4 2019: EUR 187.8 million). New business development in Germany increased in the fourth quarter of 2020 despite the resumption of tough restrictions on overall economic activity. The 6 franchise companies contributed EUR 94.6 million to GRENKE Group Factoring's new business in the reporting quarter.
Development of GRENKE Bank
GRENKE Bank's new SME lending business reached EUR 15.0 million in the fourth quarter of 2020, similar to the level in the same prior-year quarter (Q4 2019: EUR 16.5 million). GRENKE Bank's deposit business continues to be an important pillar of the Consolidated Group's refinancing with a volume of EUR 1,537.3 million as of December 31, 2020 (September 30, 2020: EUR 1,300.0 million). Compared to December 31, 2019 (EUR 884.2 million), the deposit volume increased by 73.9%.
Extension of hybrid bond (ISIN XS1262884171) of EUR 50 million
In order to strengthen the capital base and for further new business, GRENKE will not call the existing perpetual hybrid bond (ISIN XS1262884171) on the first possible date of March 31, 2021. This is the unsecured Additional Tier 1 bond (AT1 bond) originally issued with a volume of EUR 30 million by the Consolidated Group on July 22, 2015 and increased on December 20, 2016 by a further EUR 20 million.
“During the COVID-19 crisis, we clearly focused on profitable new business. The very good CM2 margins in all our markets confirm that this strategy based on risk selection and diversification has been successful. Therefore, as long as the corona crisis continues, we will maintain this focus of our business", says Sebastian Hirsch, Chief Financial Officer of GRENKE AG, in his comments on business development. "At the same time, we have sufficient liquidity to start the new year. By extending our first hybrid bond, we are conserving liquidity and also creating the basis for a sustainably solid capital base."
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