De Lage Landen has achieved continuous growth
in its portfolio over the past five years, and reported a bounce
back in net profit for 2010.
The leasing giant benefited from remaining
active in the global market place and being among the lessors with
funds available during the recession.
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Net profit surged 79 percent to €201 million
in 2010, up from €112 million in 2009. The lease portfolio grew by
2 percent to €18.5 billion during the year. DLL’s total portfolio,
comprising leasing, consumer loans, commercial finance, and
factoring, was up 6.3 percent to €25.2 billion.
Ronald Slaats, De Lage Landen CEO, said: “On
the supplier side it has shifted. We were one of the few
international lease companies still in the market, and with funding
availability. Not every lessor had access to funding.”
Having fewer competitors during 2010 enabled
DLL’s margin to creep up. Residual values rebounded, after a
dramatic fall in 2009.
“We have never focused on volume. We want to
be the best, not the biggest. Margin was too low in 2006 and 2007.
When you’re lending, you have to price for risk. Pre-crisis it was
too cheap, you couldn’t price for risk,” Slaats said.
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By GlobalDataThe income/ cost ratio returned to 2006
levels, at 1.73, for the year, with a focus on cost containment
contributing to the improvement.
“At the end of 2008, the economy was turning
around. You can only influence one thing: cost. We put a large
investment in having one, global, standardised, automated system
and process. A lease in the UK is not much different from one in
the Netherlands,” Slaats said.
The automated system has been rolled out in
North America, with Western Europe to follow. However Brazil, DLL’s
third largest market behind North America and the Netherlands, will
not benefit since some funding there is from a government food and
agriculture subsidy.
DLL’s presence in 35 countries worldwide was
considered a competitive advantage, particularly in the vendor
space.
“Big international vendors want a single point
of contact. Five years ago, if you had a franchise in North America
and Europe, you were global. Now you need to be in Asia, China,
Eastern Europe, and South America.”
The global leasing provider operates in 35
countries across four main sectors: food and agriculture,
healthcare, office technology, and construction and transportation.
Slaats described food and agriculture as “very strong” and
healthcare as “good”, both being bolstered by demand for essential
assets. Office technology was “so so”, and construction and
transport, “not very good”, during 2010.
Construction and transportation began to
recover in September 2010, and the upward trend has continued
since.
The vendor finance division grew despite
economic challenges, and took DLL into new and emerging
markets.
Slaats said: “Our vendors ask us to start up
in a country – we follow the vendor. India and Turkey, for example,
are where our vendors have taken us. There is more and more demand
for India.”
“Brazil exports a lot of beans and grains; it
needs a lot of equipment to produce them. Brazil has so much
potential as the competition is a bit less there. It exports a lot
of raw material to China, which needs financing.”
Heavy losses never materialised in Brazil,
China and Russia during the recession.
DLL’s global vendor partners include printer
and photocopier maker Ricoh, agriculture equipment manufacturer
Massey Ferguson, and a joint venture with Phillips Medical
Capital.
