GRENKE AG, a global provider of financing for SMEs across Europe, posted new leasing business of €372.2m in the third quarter of 2021 (Q3 2020: €517.6m).
Global supply bottlenecks, specifically at manufacturers of computer and office equipment, were the cause of the weaker year-on-year new leasing business. The contribution margin 2 declined slightly in the third quarter due to refinancing costs and amounted to 17.1 per cent (Q3 2020: 18.4 per cent). New business volume is the total acquisition cost of all newly purchased leased assets.
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Guidance adjusted
As a result of the current developments, the company has adjusted its guidance for new leasing business in the current financial year to between €1.5bn and €1.7bn (previously €1.7bn to €2bn). The forecast for net profit in the current financial year remains unchanged at €60m to €80m.
Michael Bücker, chair of the board of directors at Grenke, said: “I am convinced of Grenke’s potential as a backbone for financing SMEs.”
Regional developments
Grenke reported that the decline in new business exists across all regions – albeit to varying degrees. The strongest decline of 39.9 per cent was recorded in the Southern Europe region.
New business in the DACH region declined by 22.8 per cent, while Northern and Eastern Europe showed a decline of 25.5 per cent, with other regions reporting the smallest drop of 19.7 per cent. A decline of 24.8 per cent was experienced in the Western Europe region without DACH.
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By GlobalDataDevelopment of contribution margin
The contribution margin 2 (CM2) of the new leasing business amounted to €63.6m in the third quarter of the current financial year (Q3 2020: €95.2m). The CM2 margin was 17.1 per cent (Q3 2020: 18.4 per cent). The contribution margin (CM) is a measure of profit per unit.
The CM1 margin in the reporting quarter stood at 10.9 per cent compared to 12.7 per cent in the same quarter of the previous year.
The CM2 margin as well as the underlying CM1 margin were primarily impacted by increased refinancing costs. Going forward, GRENKE expects refinancing costs to decrease again, leading to a return to rising contribution margins.
The CM2 declined across all regions in line with new business development. The strongest decline in contribution margin 2 of 40.6 per cent was recorded in the Southern Europe region.
In the DACH region and in Western Europe excluding DACH, the contribution margin declined by 34.3 per cent and 31.3 per cent, respectively. The other regions and Northern and Eastern Europe were the least affected with declines of 23.2 per cent and 26.5 per cent, respectively.
CM1 recorded a decrease of 38.7 per cent to €40.4m (Q3 2020: €65.9m), with the CM1 margin falling from 12.7 per cent in Q3 2020 to 10.9 per cent in Q3 2021.
The Grenke Group received a total of 100,416 lease applications in the third quarter of 2021. Of the total, 22,339 applications originated in the DACH region and 78,077 applications in international markets. At the Consolidated Group level, 48,724 new lease contracts were concluded from these applications, corresponding to a conversion rate of 49%.
With a purchased receivables volume of €178.5m, Grenke Group Factoring’s new business recorded a favourable increase of 15.6 per cent compared to the same period in the previous year (Q3 2020: €154.4m).
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