- GRENKE Group’s new business in 2019 reaches EUR 3,566.6 million for a year-on-year increase of 19.7%
- Solid growth achieved in core markets
- Sharp rise in contribution margin generated in the second half-year
Baden-Baden, January 3, 2020: The GRENKE Group looks back on another year of successful new business development during the 2019 fiscal year just completed. The acquired new business volume at GRENKE Group Leasing, which is defined as the total acquisition costs of newly purchased leased assets, reached a sum of EUR 2,849.1 million for the year as a whole. This figure corresponds to new business growth in the Leasing segment of 18.2% over the prior year (EUR 2,409.8 million) and was within the target range of 18 to 21%. This range was raised during the reporting year from originally 14 to 19% growth based on the positive business performance. New business at GRENKE Group Factoring also developed favourably with total purchased receivables increasing 25.9% to EUR 663.4 million compared to the prior year (EUR 526.9 million), placing it in line with the forecast of 25%.
"In 2019, we again achieved above-average growth rates in a challenging market environment and have met our ambitious annual forecasts in all segments. With the results of the fiscal year just completed, we have laid the foundation for further profitable growth. We will build on the success achieved in prior years, drive forward our internationalisation with our proven business model and further expand our portfolio of outstanding products and processes with digital services in the fields of leasing, factoring and banking", says Antje Leminsky, Chair of the Board of Directors of GRENKE AG, in her comments about the past fiscal year and the strategic course set.
New business in the 2019 fiscal year was contracted with very favourable contribution margins. The measures defined in the third quarter to increase contribution margins continued to be consistently implemented in the fourth quarter. As a result, the positive trend in the CM2 margin at GRENKE Group Leasing further extended into the fourth quarter, increasing sequentially by 70 basis points from a level of 17.1% in the third quarter to 17.8% in the fourth quarter of 2019. The contribution margin 2 (CM2) in the Leasing segment in the twelve-month period amounted to EUR 485.2 million compared to EUR 420.7 million in the prior fiscal year and is equivalent to a margin of 17.0% versus 17.5% in 2018. At EUR 354.2 million (12M-2018: EUR 305.0 million), the CM1 margin of the Leasing segment (contribution margin 1 at acquisition cost) in the same period amounted to 12.4% (12M-2018: 12.7%).
The number of contracts concluded via eSignature continued to rise. In 2019, a total of 78,480 contracts (12M-2018: 59,989) were concluded using this innovative offer, resulting in an increase of 30.8%. eSignature, which was introduced in 2015 and allows leasing contracts to be processed entirely digitally, is available in 20 countries.
In 2019, GRENKE achieved solid and satisfactory growth once again in its three core leasing markets: for the year as a whole, year-on-year growth of 16.4% was achieved in Germany. France (+18.2%) and Italy (+8.5%) also reported strong growth in fiscal year 2019.
"Towards the end of the year, we were able to strengthen our liquidity for further new business with a conventional bond for EUR 300 million and a hybrid bond for EUR 75 million, while at the same time expanding our equity base for further growth. Moreover, the outstanding development in contribution margins in the second half of the year provides us with continued solid profitability from the existing portfolio for the years to come", explains Sebastian Hirsch, member of the Board of Directors of GRENKE AG.
In 2019, the GRENKE Group received a total of 616,269 lease applications (514,013 thereof were international), which in turn resulted in 313,818 new lease contracts (253,063 thereof were international). At EUR 9,079 (2018: EUR 8,890), the mean term per lease contract remained at a level customary for our business. The conversion rate (applications into contracts) in the GRENKE Group (Leasing segment) was 51%. In our international markets, 49% of the applications were converted into contracts, which was lower than in the DACH region at 59%.
As previously stated, we were able to increase our new business volume in the Factoring segment by 25.9% to EUR 663.4 million. The gross margin on new business volume generated in Germany of EUR 176.7 million remained at a high level of 1.55% (2018: 1.66%). In our international markets, the gross margin on new business volume of EUR 486.8 million amounted to 1.36% (2018: 1.30%). This margin is based on the average period for a factoring transaction in Germany of approximately 27 days (2018: approx. 27 days) and about 41 days internationally (2018: approx. 39 days). In comparison to Germany, the international business contains a higher share of debt collection services, for which no default risk is assumed.
In the lending business for small and medium-sized companies (including business start-up financing), GRENKE Bank reported a strong increase of 25.5%. The volume in 2019 on an absolute basis amounted to EUR 54.1 million compared to EUR 43.1 million in the prior year. The deposit volume increased year-on-year by 27.7% to EUR 884.2 million compared to EUR 692.4 million in the prior year.
The Company will publish the 2019 Annual Report on February 11, 2020.