- New business at the GRENKE Group increases 21.5% to EUR 549.9 million in Q1
- Proportion of new business from international markets continues to grow
- Adjustment in calculation of the contribution margin 2 brings increased transparency
Baden-Baden, April 4, 2017: A very satisfactory level of new business growth in the first quarter provided the GRENKE Group with a good start to the current 2017 fiscal year. The acquired volume at GRENKE Group Leasing – defined as the total acquisition costs of newly purchased leased assets – grew 20.1% to EUR 445.6 million in the first three months (previous year: EUR 371.1 million). The level of growth is above the projected range for the full year of 11 to 16%. New business at GRENKE Group Factoring also developed positively. The total of purchased receivables increased 28.1% to EUR 97.7 million (previous year: EUR 76.3 million).
"In the first quarter, we built a solid basis for the Group’s continued development throughout the year, recording double-digit growth rates in new business in all segments of the GRENKE Group. We continued to see strong growth from our international markets in particular. As a result, the international share of our new business continued to grow, reaching 74.0% compared to 71.8% in the previous year," said Wolfgang Grenke, Chairman of the Board of Directors of GRENKE AG, in his comments on the new business development in the first three months of 2017.
The calculation of the contribution margin 2 (CM2) for new business in the Leasing segment was adjusted starting with the first quarter of 2017 to further improve the transparency of the reconciliation to the Consolidated Group’s operating results. As a result, the CM2 for the three-month period amounted to EUR 80.8 million compared to EUR 67.8 million in the previous year, which is equivalent to a CM2 margin of 18.1% (previous year: 18.3%). For comparison, the values according to the previous calculation method are listed separately in the table below. The previous CM2 calculation did not appropriately reflect economies of scale in the cost items. The unchanged calculation for the CM1 margin (contribution margin 1 at acquisition values) was 12.4% and reached a level of EUR 55.1 million (previous year: 12.9% and EUR 48.0 million, respectively).
Sebastian Hirsch, member of the GRENKE AG Board of Directors, added: "The adjusted calculation of the CM2 margin provides more transparency as the CM2 now directly corresponds to the operating result contained in the income statement. The income statement shows the contribution of the leasing portfolio for the respective period whereas the CM2 shows the contribution over the entire term."
On a regional basis, we recorded a moderate increase in new business (Leasing segment) of 5.9% in our home market of Germany in the face of continuing intense competition. This contrasts with the sharply higher growth achieved in our international markets (+ 24.6%), particularly in the important market of Italy (38.3%) as well as in Great Britain (40.5%) and Spain (40.1%).
As part of our cell division strategy, we opened one new location each in Denmark, Italy and the Netherlands in the first quarter of 2017. We also opened a new branch office in Abu Dhabi bringing the number of GRENKE locations at the end of the first quarter to a total of 126 worldwide. In the second quarter, we plan to enter the Australian market and the rollout of our factoring offers in Italy.
In the first three months of 2017, the GRENKE Group recorded 119,129 lease applications (99,800 thereof were international), which generated 52,075 new lease contracts (42,731 thereof were international). At EUR 8,557 (previous year: EUR 8,518) the mean acquisition value per lease contract continued to remain at a level customary for our business.
The GRENKE Group’s (Leasing segment) conversion rate (applications into contracts) was 44%. The conversion rate in our international markets amounted to 43% and was thereby at a lower level than in the German market (48%).
In our Factoring segment, we increased our new business volume by a pleasing 28.1%. The gross margin on the new business volume of EUR 42.1 million acquired in Germany remained at a high level of 1.69% (previous year: 2.01%). In our international markets, the gross margin on new business volume of EUR 55.6 million amounted to 1.15% (previous year: 1.34%). This margin is based on the average period of approximately 27 days for a factoring transaction in Germany (previous year: approx. 29 days) and approximately 38 days in our international markets (previous year: approx. 38 days).
The development of GRENKE Bank’s business start-up financing and microcredit business was also exceptionally strong, growing year-on-year by 31.1% and reaching a total volume of EUR 6.6 million.