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    GLJ   DE000A161N30

GRENKE AG

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GRENKE : substantially increases contribution margin 2 in Q1 2021 and achieves 53.7% of new leasing business generated in strong prior-year quarter

04/07/2021 | 01:02am EDT
  • New leasing business in Q1 2021 reaches EUR 365.8 million (Q1 2020: EUR 681.3 million)
  • Contribution margin 2 increases in Q1 2021 to 19.5% (Q1 2020: 18.2%)
  • Focus on small ticket contracts leads to higher profitability
  • Mean acquisition value per lease contract at EUR 7,434 (Q1 2020: EUR 9,005)
  • Completion of audits by Mazars and KPMG expected in the coming weeks
  • Publication of 2020 financial figures planned for April 30, 2021 - potentially before audit opinion is issued

Baden-Baden, April 7, 2021: GRENKE AG, a global financing partner for small and medium-sized enterprises, generated new leasing business of EUR 365.8 million in Q1 2021, equalling 53.7% of the level in the strong prior-year quarter (Q1 2020: EUR 681.3 million). The new business development in Q1 2021 is a consequence of the weaker economy resulting from the corona pandemic as well as the result of the Company's successful focus on small ticket contracts, which generate higher contribution margins. The higher number of contracts also leads to broader risk diversification. New leasing business is defined as the total acquisition cost of all newly purchased leased assets.

'With our presence in the market, we are supporting SMEs with their investments, even in these difficult times. Although, as a result of the pandemic, we were not yet able to return to pre-corona levels in the first quarter of 2021, we did see rising applications in new leasing business in recent days. These have even exceeded the level reached in the final days of March 2020,' commented Antje Leminsky, Chair of the Board of Directors of GRENKE AG, on the first quarter of 2021.

Sebastian Hirsch, Chief Financial Officer of GRENKE AG, added, 'We have been and still are well prepared for the challenging situation caused by corona. In our new business management, we pay particular attention to contribution margins and risk limitation. Here, we also benefit from our broad international positioning.'

Regional development of new leasing business

In a regional analysis, new leasing business in GRENKE's strongest region, the DACH region,
decreased by 34.1% in the first quarter of 2021 compared to the first quarter of 2020. Western Europe without DACH recorded a 44.5% decline in new leasing business in the current reporting period. New business decreased by 57.6% in Southern Europe and by 52.5% in Northern/Eastern Europe. The other regions from the leasing business registered a 20.6% decline in new business. This development is attributable both to the strategic focus on higher margins in new business and to lower overall demand in the target markets due to the economic situation.

Percentage contribution margin development

In the first quarter of 2021, contribution margins developed in line with the volume of new leasing
business. The contribution margin 2 (CM2) of the leasing business amounted to EUR 71.5 million,
compared to EUR 123.9 million in the same prior-year quarter. The decline caused by the lower volume of new business was partially offset by the increase in the CM2 margin to 19.5% (Q1 2020: 18.2%). The higher CM2 margin was largely made possible through the consistent focus on the profitable small ticket business. The mean acquisition value per lease contract developed accordingly and amounted to EUR 7,434 in Q1 2021 (Q1 2020: EUR 9,005). 'Small tickets' are defined as lease contracts with a volume of between EUR 500 and EUR 25,000.

Contribution margin 1 (CM1) in Q1 2021 reached EUR 46.6 million (Q1 2020: EUR 88.1 million),
recording a decline of 47.1% in line with the decrease in new business volume. At 12.7%, the CM1 margin was slightly below the prior-year level (Q1 2020: 12.9%).

Regional development of contribution margins

In the first quarter of 2021, contribution margin 2 in the DACH region decreased by 38.7% compared to the strong prior-year quarter. A smaller decrease was recorded in Western Europe without DACH at 36.1%. In the Southern Europe and Northern/Eastern Europe regions, contribution margins declined the most, by 51.8% and 48.3%, respectively.

Given the current economic environment, the number of lease applications registered by GRENKE in the first quarter of 2021 totalling 116,814 remained stable at the level of the previous fourth quarter of 2020 (115,260 lease applications). In the first quarter of 2020, which was still largely unaffected by the COVID-19 pandemic, the number of lease applications equalled 154,175. In the first quarter of 2021, 22,285 applications were received in the DACH region and 94,529 in international regions. At Group level, 49,213 new leases were concluded, corresponding to a conversion rate of 42%. The conversion rate in the fourth quarter of 2020, in contrast, was 49% with 56,182 new leases. In the first quarter of 2020, 75,654 lease contracts were concluded for a conversion rate of 49%.

Development of the factoring business

With a purchased receivables volume of EUR 155.4 million, new factoring business declined by 9.5% compared to the same period of the previous year (Q1 2020: EUR 171.7 million). In Germany, factoring new business increased by 3.3% despite the lower level of overall economic activity. In the international markets, factoring new business saw a decline of EUR 19.7 million to EUR 18.3 million. The six
franchise companies contemplated for acquisition contributed EUR 86.3 million to new factoring
business in the reporting quarter, for an increase of 2.1% compared to the first quarter of the previous year.

Development of GRENKE Bank

The new business in the area of SME lending previously comprised loans to small and medium-sized enterprises, business start-up financing and the microcredit business. At EUR 14.7 million, GRENKE Bank's new business in the first quarter of 2021 was 18.2% below the prior-year quarter (Q1 2020: EUR 18.0 million) and is attributable to the microcredit business. Here, loans are granted under the 'Microcredit Fund Germany' of the German Federal Ministry of Labour and Social Affairs and are secured by the federal government. In the first quarter of 2020, microcredit business reached EUR 4.5 million. Loans to small and medium-sized enterprises were discontinued in Q1 2021, as already announced in February 2021. GRENKE Bank's deposit business continues to be an important pillar of the
Consolidated Group's refinancing with a deposit volume of EUR 1,637.4 million as of March 31, 2021 (December 31, 2020: EUR 1,537.3 million).

Publication of 2020 consolidated financial statements

Due to the still ongoing audits by the auditing firm Mazars mandated by the German Federal Financial Supervisory Authority (BaFin) and the parallel audit of the annual financial statements by KPMG, GRENKE has not yet published a corporate calendar for 2021. The Company expects the audits to be completed and the consolidated financial statements to be issued with an audit opinion in the coming weeks. As a result, GRENKE intends to publish its 2020 financial year figures on April 30, 2021, possibly before the audit opinion is issued, and to discuss these figures at a virtual annual press conference and a virtual analyst conference.

For further information, please contact:

GRENKE AG
Team Investor Relations
Neuer Markt 2
76532 Baden-Baden
Phone: +49 7221 5007-204
Email: investor@grenke.de
Website: www.grenke.com

Press contact

Stefan Wichmann
Executive Communications Consulting
Alfred-Bierwirth-Weg 2
D-53572 Unkel (near Bonn)
Phone: +49 22 24 98 77 98
Email: presse@grenke.de
Mobile: +49 (0) 171 20 20 300

Disclaimer

Grenke AG published this content on 07 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 April 2021 05:01:04 UTC.


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Financials
Sales 2020 560 M 683 M 683 M
Net income 2020 69,3 M 84,6 M 84,6 M
Net Debt 2020 5 447 M 6 648 M 6 648 M
P/E ratio 2020 23,1x
Yield 2020 1,55%
Capitalization 1 509 M 1 834 M 1 842 M
EV / Sales 2020 12,4x
EV / Sales 2021 12,5x
Nbr of Employees 1 800
Free-Float 56,1%
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Mean consensus BUY
Number of Analysts 4
Average target price 55,50 €
Last Close Price 32,46 €
Spread / Highest target 103%
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Spread / Lowest Target 41,7%
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Managers and Directors
NameTitle
Antje Leminsky Chairman-Management Board
Sebastian Hirsch Chief Financial Officer
Ernst-Moritz Lipp Chairman-Supervisory Board
Florian Schulte Member-Supervisory Board
Ljiljana Mitic Member-Supervisory Board
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