DGAP-News: GRENKE AG / Key word(s): Miscellaneous
GRENKE AG: GRENKE substantially increases contribution margin 2 in Q1 2021 and achieves 53.7% of new leasing business
generated in strong prior-year quarter
2021-04-07 / 06:57
The issuer is solely responsible for the content of this announcement.
GRENKE substantially increases contribution margin 2 in Q1 2021 and achieves 53.7% of new leasing business generated in
strong prior-year quarter
- 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
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.
Overview of new business development (in EUR millions)
Q1 2021 Q1 2020 Change in %
New Business GRENKE Group Leasing 365.8 681.3 -46.3
- of which international 248.4 503.1 -50.6
- of which franchise companies** 13.1 20.0 -34.6
- of which DACH* 104.3 158.2 -34.1
Western Europe (without DACH)* 98.4 177.4 -44.5
Southern Europe* 83.4 196.9 -57.6
Northern/Eastern Europe* 57.2 120.5 -52.5
Other regions* 22.4 28.3 -20.6
New Business GRENKE Group Factoring 155.4 171.7 -9.5
- of which Germany 50.8 49.2 3.3
- of which international 18.3 38.0 -51.9
- of which franchise companies*** 86.3 84.5 2.1
New business SME lending business 14.7 18.0 -18.2
Deposit volume**** 1,637.4 976.7 67.6
Contribution margin 2 (CM2) on new business
GRENKE Group Leasing 71.5 123.9 -42.3
- of which international 53.8 95.4 -43.6
- of which franchise companies** 2.8 4.3 -33.8
- of which DACH* 14.9 24.3 -38.7
Western Europe (without DACH)* 21.3 33.4 -36.1
Southern Europe* 18.0 37.3 -51.8
Northern/Eastern Europe* 11.8 22.8 -48.3
Other regions* 5.5 6.1 -9.1
Note: Rounding differences may occur
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April 07, 2021 00:58 ET (04:58 GMT)