- Net profit of EUR 61.8 million in the first nine months is 18.0% above previous year (Q1–Q3 2021: EUR 52.4 million); Q3 net profit at EUR 20.3 million (Q3 2021: EUR 20.1 million)
- Leasing portfolio continues to expand
- Loss rate in Q3 drops to 1.4% (Q3 2021: 1.7%)
- CFO Dr Sebastian Hirsch: “Our solid new business lays the foundation for rising income in the years ahead.”
Baden-Baden, November 10, 2022: GRENKE AG, a global financing partner for small and medium-sized enterprises, increased its Consolidated Group net profit by 18.0% to EUR 61.8 million in the first three quarters of 2022 (Q1–Q3 2021: EUR 52.4 million). The foundation for this growth was primarily the new leasing business generated in prior years. The strong new leasing business in the first nine months of the current year, amounting to EUR 1.65 billion (Q1–Q3 2021: EUR 1.14 billion; +45.4%), forms the basis for future profit growth. In the third quarter, net profit equalled EUR 20.3 million (Q3 2021: EUR 20.1 million). This marked the fourth consecutive quarter that GRENKE has increased not only its new leasing business but also its Consolidated Group net profit.
“We have entered the final straight for 2022,” commented Dr Sebastian Hirsch, CFO and Deputy Chair of the Board of Directors of GRENKE AG. “And we are very confident that our goals for 2022 – the first important milestone in implementing our long-term growth objectives – will be achieved.”
The leasing portfolio in the third quarter increased by 2% to EUR 5.2 billion (Q2 2022: EUR 5.1 billion). Together with a mean contract term of four years, this is the foundation for future higher income. “After the corona-induced dip over the past two years, our portfolio and our customer base are now growing again,” emphasised Dr Sebastian Hirsch: “The leases of today are the substance of our earnings tomorrow and the day after.”
Despite the current difficult economic climate and continued caution concerning macroeconomic factors, expenses for settlement of claims and risk provision in the third quarter of 2022 were lower again year-on-year, as GRENKE’s robust portfolio allowed it to bring risk provisioning back to a pre-corona level. In the period from July to the end of September 2022, expenses for settlement of claims and risk provision fell by 18.7% to EUR 30.3 million (Q3 2021: EUR 37.3 million). The resulting loss rate in the reporting period was 1.4% (Q3 2021: 1.7%), placing it at the lower end of the guidance range of 1.4% to 1.7% for the current 2022 financial year.
Staff increases to reinforce governance structures in recent months, in addition to a change in the remuneration model in line with the market and a one-off payment to the approximately 1,900 employees to compensate for the significant cost-of-living increase, have led to higher staff costs. The company sees this proactive measure as the practical implementation of its values and social responsibility. Compared to the same quarter of the previous year, staff costs increased by EUR 7.7 million to EUR 38.2 million (Q3 2021: EUR 30.5 million). As a result of increased interest rates and the associated higher discount rates used in the valuation models, GRENKE recognised a non-tax-deductible goodwill impairment in Portugal in the amount of EUR 4.0 million at the end of Q3 2022. The cost-income ratio was therefore 56.5% in the third quarter (Q3 2021: 47.4%), compared to 54.3% in the first three quarters of 2022 (Q1–Q3 2021: 48.0%). For full-year 2022, the cost-income ratio is not expected to exceed a level of 55%. GRENKE AG’s guidance published on March 17, 2022 assumed a cost-income ratio of less than 52%.
The higher interest rates also led to an extraordinary positive valuation effect in the third quarter of 2022 of EUR 7.5 million, or EUR 5.4 million after taxes, from derivative financial instruments for interest rate hedges. Combined with the goodwill impairment of EUR 4.0 million, this resulted in a net positive extraordinary effect on net profit of EUR 1.4 million.
As of the September 30, 2022 reporting date, the GRENKE Group’s total assets amounted to EUR 6.4 billion (December 31, 2021: EUR 6.7 billion). The largest balance sheet item, current and non-current lease receivables, increased slightly as of the reporting date to EUR 5.2 billion (December 31, 2021: EUR 5.1 billion). As of September 30, 2022, liquidity in the form of cash and cash equivalents returned, as planned, to a customary level of approximately EUR 0.5 billion (December 31, 2021: EUR 0.9 billion). The equity ratio as of September 30, 2022 rose to 20.7% (December 31, 2021: 19.1%), placing it comfortably above the self-set target of a minimum of 16.0%.
The Board of Directors reaffirms its forecast for new leasing business in 2022, which was raised on October 4, 2022 to a volume of EUR 2.1 billion to EUR 2.3 billion. The Board of Directors continues to expect a Consolidated Group net profit in the range of EUR 75 million to EUR 85 million.
For 2024, the Board of Directors continues to expect new leasing business of EUR 3.4 billion and net profit of EUR 140 million. This level represents a doubling of GRENKE’s new leasing business and net profit compared to the 2021 financial year.
The Q3 and Q1–Q3 2022 report is available online at www.grenke.com/investor-relations/reports-and-presentations/.
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