- Consolidated Group net profit increased by 35% to EUR 18.3 million
- Customer payment behaviour stable; expenses for settlement of claims and risk provision decline
- Stronger new business expected in the second half of 2021 as a result of further recovery of markets
- CFO Dr Sebastian Hirsch: "Remarkably positive profit development".
- CEO Michael Bücker: "Driving forward the transformation process with unwavering commitment".
Baden-Baden, Germany, August 4, 2021: GRENKE AG, a global financing partner for small and medium-sized enterprises, significantly increased its net profit in the second quarter of 2021, despite the effects of the Covid-19 pandemic. Consolidated net profit after taxes increased to EUR 18.3 million (Q2 20201: EUR 13.5 million). This was mainly due to a decline in expenses for settlement of claims and risk provision, which fell 40.3% to EUR 39.5 million (Q2 20201: EUR 66.2 million) and was attributable to the stable payment behaviour of customers. The resulting loss rate in the reporting period was 1.8%. In the same prior-year quarter, risk provisions had been increased due to expected payment defaults as a result of the Covid-19 pandemic but did not occur to the same extent.
Last week the Board of Directors raised the profit forecast for the 2021 financial year based on its assumption that customers' payment behaviour will continue to be stable in the second half-year. GRENKE AG now expects Consolidated Group net profit in the range of EUR 60 million to EUR 80 million compared to its previous forecast of EUR 50 million to EUR 70 million.
Chief Financial Officer Dr Sebastian Hirsch in his comments on the results said: "Our results in the second quarter of 2021 are better than originally expected – not least due to our conservative risk management. Now in the further course of the year, our aim is to generate additional new business. We are ready to give it our all to achieve this, thanks to our solid equity base."
In his first public appearance as GRENKE's new CEO, Michael Bücker emphasised that he sees one of his most important tasks as ensuring the required high level of internal control functions and processes and embedding them for the long-term in the corporate culture throughout the GRENKE Group. Michael Bücker: "We will drive forward this necessary process of change with an unwavering commitment. This is why I will be actively involved in the dialogue with the supervisory authorities in the weeks ahead."
At 50.9% (Q2 20201: 40.0%), the cost-income ratio (CIR) in the second quarter of 2021 remained slightly above the full-year 2021 target of under 50%. The reason was the exceptional charges of EUR 2.4 million for legal, consulting and audit costs resulting from the special audits. Adjusted for the non-recurring charges, a CIR of 49.1% was achieved in the second quarter of 2021.
As of the June 30, 2021 reporting date, the GRENKE Group's total assets amounted to EUR 6.8 billion (December 31, 20201: EUR 7.3 billion). Non-current and current lease receivables, which represent the largest balance sheet item, decreased by 5.9% as of the reporting date and amounted to EUR 5.3 billion (December 31, 20201: EUR 5.6 billion). This decline reflects the lower volume of new business in recent quarters. As of June 30, 2021, liquidity remained at a high level and amounted to EUR 0.8 billion (December 31, 20201: EUR 0.9 billion). The lower level of total assets brought up the equity ratio to 17.8% as of June 30, 2021 (December 31, 2020: 16.3%), which was even more clearly above the self-set target of a minimum of 16%.
Although GRENKE's 2021 financial year began on a subdued note due to the Covid-19 pandemic, new business and profit picked up again in the second quarter. The Board of Directors of GRENKE AG expects the markets to recover slightly in the further course of the year and lead to more strength in new business than in the first half of 2021. The Board of Directors currently expects new leasing business of between EUR 1.7 billion and EUR 2.0 billion, compared to EUR 2.0 billion in the previous year. GRENKE AG expects Consolidated Group net profit to be in the range of EUR 60 million to EUR 80 million.
Many of the measures resulting from the special audits are expected to be implemented in the current financial year. GRENKE intends to acquire the first franchise companies by the end of 2021 and to complete the entire acquisition process in 2022.
The report on the second quarter and first half-year of 2021 is available online at https://www.grenke.com/investor-relations/reports-and-presentations.
1 Figures adjusted according to IAS 8.42 (including consolidation of franchise companies)
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