- Number of new lease contracts rises again year-on-year for the first time since the beginning of the pandemic
- New leasing business of EUR 398.6 million at previous year's level (Q2 2020: EUR 402.3 million)
- CM2 margin of 18.1% above same prior-year quarter (Q2 2020: 17.5%)
- New syndicated revolving credit facility with a total volume of EUR 250 million
- GBB lowers rating from A to A-
- Half-year financial report and analyst call scheduled for August 4, 2021
Baden-Baden, July 2, 2021: GRENKE AG, a global financing partner for small and medium-sized enterprises, generated new leasing business of EUR 398.6 million in Q2 2021, the same level as in the previous year (Q2 2020: EUR 402.3 million). The number of new contracts increased in Q2 2021 by 11.3% to 56,078, which was the first year-on-year increase since the outbreak of the Covid-19 pandemic. The contribution margin 2 of the new leasing business also increased from 17.5% in the same prior-year quarter to 18.1% in the reporting quarter. The new leasing business is defined as the total acquisition cost of all newly purchased leased assets.
"When we look back on the past few months, it's becoming evident that things are on the upturn. At the same time, we find ourselves in a market environment that continues to be dominated by the pandemic," explains Dr Sebastian Hirsch, Chief Financial Officer of GRENKE AG, adding: "With the onset of the Covid-19 crisis, we focused our new business activities specifically on risk limitation and small-ticket business. This strategy has worked, and we are now on the verge of taking the next step in which we also want to successively increase volumes. We have met a key prerequisite for achieving this based on our syndicated loan."
Regional development of new leasing business
The timing of the pandemic's development on a regional basis has varied dramatically. These differences are very visible when comparing the operating performance. At the beginning of Q2 2020, new business in Germany was still less affected by the pandemic. In comparison to this relatively robust performance a year ago, the DACH region saw lower year-on-year new leasing business in Q2 2021 of EUR 111.1 million (Q2 2020: EUR 131.6 million). Western Europe without DACH, on the other hand, recorded a significant increase of 27.8% in the same period. GRENKE achieved substantial growth in the second quarter of 2021, particularly in France, the Netherlands and Luxembourg. The Southern Europe region, in contrast, new business declined year-on-year by 12.2%. The strength of new business development in Spain, Portugal and Croatia was not able to fully compensate for the lower number of contracts in Italy. In Northern and Eastern Europe, GRENKE recorded growth in the new leasing business of 6.0%, driven by a significant increase in Great Britain and Poland. Other regions recorded new leasing business of EUR 20.9 million, for a year-on-year increase of 11.0%.
Development of the contribution margin
At EUR 72.1 million, the contribution margin 2 (CM2) of the new leasing business was close to the level of EUR 70.4 million reported in the same prior-year quarter. The CM2 margin increased again and reached 18.1% in Q2 2021 (Q2 2020: 17.5%), as a result of the ongoing and consistent focus on the profitable small-ticket business. The mean acquisition value per lease contract was EUR 7,108 in the reporting quarter (Q2 2020: EUR 7,985). GRENKE defines "small tickets" as lease contracts with a volume of between EUR 500 and EUR 25,000.
The contribution margin 1 (CM1) in Q2 2021 was 2.8% below the same quarter last year at EUR 47.2 million (Q2 2020: EUR 48.5 million). As a result, GRENKE achieved a CM1 margin of 11.8%, which was just below the previous year's level (Q2 2020: 12.1%).
Regional development of the contribution margins
A comparison of contribution margins 2 also reveals the dramatic differences in terms of timing and regional developments during the course of the pandemic. While a decline in the contribution margin 2 of 21.6% was recorded in the DACH region, the Western Europe excluding DACH region, recorded substantial growth of 26.8%. In Southern Europe, the contribution margin 2 in Q2 2021 declined slightly by 3.5%, whereas Northern/Eastern Europe achieved growth of 11.5%. Other regions were able to achieve year-on-year growth of 12.3%.
In the reporting quarter, GRENKE received a total of 117,387 lease applications – the first year-on-year increase since the start of the pandemic (Q2 2020: 111,934) – indicating an initial recovery in some of the target markets. During the reporting quarter, the DACH region accounted for 24,673 applications and the international regions for 92,714 applications. GRENKE concluded a total of 56,078 new lease contracts in the reporting period, corresponding to a conversion rate of 48%. In Q2 2020, 50,381 leases were concluded, equalling a conversion rate of 45%.
New factoring business
With a purchased receivables volume of EUR 175.2 million, GRENKE achieved significant growth in new factoring business of 23.7% in the reporting quarter compared to the same prior-year period (Q2 2020: EUR 141.7 million). Growth was driven, above all, by the strong performance in Germany (+33.3% to EUR 56.4 million). New factoring business in the international markets rose by 19.6% from EUR 99.3 million in the prior year quarter to EUR 118.8 million in Q2 2021.
With the adjustment of the business volume in the SME lending business made at the beginning of the year, GRENKE Bank's new lending business decreased by 88.7% to EUR 6.1 million in Q2 2021 (Q2 2020: EUR 54.2 million), as expected. Regardless of this decline, GRENKE Bank's deposit business continues to be an important pillar of the Consolidated Group's refinancing, with a deposit volume of EUR 1,505.2 million as of June 30, 2021 (June 30, 2020: EUR 1,312.3 million).
Financing base broadened – GBB lowers rating from A to A-
On June 30, 2021, the GRENKE Group signed a syndicated revolving credit facility with a total volume of EUR 250 million with seven core banks. The facility runs for two years, with the option to extend the term for up to two further years.
The GBB-Rating Gesellschaft für Bonitätsbeurteilung mbH lowered the rating for the GRENKE Group from A to A- on July 1, 2021. The outlook remains negative. GBB cited its primary rationale for this change as the Company's earnings situation, which is under pressure due to the Covid-19 pandemic, as well as the progress that still needed to be made in the Company's governance and risk & compliance management to restore investor confidence. The economic viability of the business model continues to be rated as high. The GRENKE Group therefore continues to be given a high credit rating.
The half-year financial report will be published on August 4, 2021.
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