- Net profit of EUR 14.0 million in Q1 2021 (Q1 20201: EUR 19.7 million)
- Cost-income ratio at 51.2% (adjusted for extraordinary consulting and audit costs: 46.0%)
- Markets expected to pick up in the second half of the year, resulting in stronger new business
- Business forecast for 2021 reaffirmed: New leasing business of EUR 1.7 to 2.0 billion, net profit in the range of EUR 50 million to EUR 70 million and equity ratio > 16%
Baden-Baden, May 31, 2021: GRENKE AG, global financing partner for small and medium-sized enterprises, generated net profit of EUR 14.0 million in the first quarter of 2021 (Q1 20201: EUR 19.7 million) despite the impact of the COVID-19 pandemic.
"This is a respectable result. The pandemic has hit the global economy hard, and still GRENKE is proving to be more than robust, even in these challenging times," said Antje Leminsky, Chair of the Board of Directors of GRENKE AG, in her comments on the business performance in the first quarter of 2021.
Chief Financial Officer Sebastian Hirsch adds: "We are on track. Now we need a return to normality to grow our business again. We expect our new business to pick up in the second half of the year."
The cost-income ratio (CIR) was 51.2% (Q1 20201: 43.7%), and thereby exceeded the full-year target of below 50%. This is mainly due to the extraordinary consulting and audit costs of EUR 6.7 million for the first quarter as a result of the special audits. Adjusted for these non-recurring expenses, the CIR is 46.0%. Consulting and audit costs in the first quarter of 2021 came to a total of EUR 11.2 million (Q1 20201: EUR 3.9 million). As a result, selling and administrative expenses increased 27.5% to EUR 25.2 million in the reporting period (Q1 20201: EUR 19.8 million). Staff costs remained stable at EUR 31.7 million (Q1 20201: EUR 31.7 million).
The steady payment behaviour of customers had a positive effect in the first quarter of 2021, resulting in risk provisions of EUR 44.6 million, which was 21.7% lower than in the same prior-year quarter. The corresponding loss rate in the first quarter of 2021 was 2.0%.
The GRENKE Group's total assets amounted to EUR 7.2 billion as of the March 31, 2021 reporting date (December 31, 2020: EUR 7.3 billion). The largest balance sheet item – non-current and current lease receivables – decreased by 3.1% to EUR 5.5 billion as of the reporting date (December 31, 2020: EUR 5.6 billion). This development reflects the lower volume of new business in recent quarters. Liquidity amounted to EUR 1.1 billion as of March 31, 2021 (December 31, 2020: EUR 0.9 billion). The equity ratio was 16.5% and continued to exceed the self-set target of at least 16%.
BaFin audits in the final phase
All of the audit activities in connection with the special audit pursuant to Section 44 of the German Banking Act (KWG) that were carried out by the auditing firm Mazars have been completed. GRENKE has received the corresponding reports from the German Federal Financial Supervisory Authority (BaFin) as expected. The Company is now reviewing the measures already initiated and planned on this basis in coordination with BaFin, who will also determine how to further proceed. The enforcement review of GRENKE AG's consolidated financial statements as of December 31, 2019, and the combined group management report and management report for the 2019 financial year, which was handed over to BaFin from the German Financial Reporting Enforcement Panel on September 30, 2020, is also expected to be completed in the near future. The Company has already taken the expected findings into account in its preparation of the 2020 consolidated financial statements.
The year 2021 is a transitional year for GRENKE. 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, primarily due to the pandemic. The COVID-19 pandemic caused the financial year to get off to a subdued start, with the first quarter on par with the fourth quarter of 2020. As the year progresses, the Board of Directors expects the markets to pick up and new business to be stronger in the second half of 2021 than in the first half.
The measures from the special audits are planned to be largely implemented during the current financial year. GRENKE intends to acquire the first franchise companies by the end of 2021, with the entire acquisition process expected to be completed in 2022.
The lower new business during recent quarters and in the months to come will also be reflected in the operating income for full-year 2021. Furthermore, despite lower business volumes, the Board of Directors currently expects costs to increase slightly due to the lagging effects of the audits. In total, the Board of Directors expects net profit for the 2021 financial year in the range of EUR 50 million to EUR 70 million due to the high profitability of the existing contract portfolio and new business.
The quarterly statement for the first quarter of 2021 is available online at www.grenke.com/investor-relations/reports-and-presentations.
1 Figures have been adjusted in accordance with IAS 8.42 (including the consolidation of franchise companies).
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