DGAP-News: GRENKE AG: GRENKE's contribution margins have a lasting effect on net profit
08.02.2018 (www.4investors.de) -
DGAP-News: GRENKE AG / Key word(s): Final Results
GRENKE AG: GRENKE's contribution margins have a lasting effect on net profit
08.02.2018 / 07:11
The issuer is solely responsible for the content of this announcement.
GRENKE's contribution margins have a lasting effect on net profit
- Consolidated Group net profit rises 21.1%
- Corresponding rise in dividend to EUR 0.70 per share
- GRENKE Group expects dynamic growth to continue in 2018: projected growth in Leasing's new business of 16-20%
- Sustained earnings growth in 2018: target range of EUR 123 million to EUR 131 million after first-time application of IFRS 9 (equivalent to EUR 145 million to EUR 153 million under previous IFRS method)
Baden-Baden, February 8, 2018: GRENKE's dynamic growth over the past several years continued in the 2017 fiscal year. Consolidated Group net profit rose 21.1% to EUR 125.0 million compared to EUR 103.2 million in the previous year and underpins the strong business profitability following solid contribution margins in the previous reporting periods. The Consolidated Group slightly exceeded its net profit forecast, which had been raised to a range of EUR 118 to 124 million at the publication of the 2017 half-year report. Earnings per share increased to EUR 2.74 compared to EUR 2.29 in the previous year.
Wolfgang Grenke, Chairman of the Board of Directors of GRENKE AG, shows his strong satisfaction with the performance of the past fiscal year by commenting: "Our value-based business model has clearly proven itself once again. We continued to increase our profitability and financial strength despite the fiscal year's strong growth by raising our contribution margins, strengthening our equity and achieving excellent net profit growth. We expect similar dynamic business performance in the current 2018 fiscal year."
Income continues to reflect the positive impact of the strong, profitable new business of recent years and the persistent low interest rate environment. Overall, the sum of interest and similar income from the financing business increased by 10.9% from EUR 261.0 million in the previous year to a total of EUR 289.4 million in the reporting year. Expenses from interest on refinancing, however, continued to decline from EUR 43.2 million in the previous year to EUR 42.8 million. This led to a rise in net interest income of 13.2% from EUR 217.8 million in the previous year to EUR 246.6 million. Net interest income after settlement of claims and risk provision increased 17.5% to EUR 191.1 million compared to EUR 162.7 million in the previous year. The Consolidated Group's loss rate fell to 1.0% after 1.2% in the previous year.
Profit from service business and profit from new business increased sharply by 19.0% and 17.3%, respectively, based on the significant rise in new business volume during the past fiscal year. The Consolidated Group's income from operating business increased overall by 17.4%, rising from EUR 274.8 million in the previous year to EUR 322.5 million in the reporting year.
Including acquisitions, the average number of employees at the GRENKE Consolidated Group rose by 19.2% to 1,229 in the reporting year. This increase was accompanied by a corresponding rise in our staff costs in 2017 of 22.1% to EUR 86.2 million compared to EUR 70.6 million in the prior year. Selling and administrative expenses, on the other hand, had only a disproportionate rise of 15.9%.
Antje Leminsky, Deputy Chair of the Board of Directors of GRENKE AG and, as announced earlier, the new Chair of the Board as per March 1, 2018, and responsible, among others, for the Consolidated Group's strategy, emphasises: "We see ourselves as a growth company. In the past 2017 fiscal year, we created more jobs and sustainably intensified our proximity to our customers by opening new locations. We plan to do the same in 2018. In addition to our plans to complete various cell divisions in our five most important markets, we will accelerate our market entry with our leasing offers in the Baltic states and in New Zealand. We also intend to gain a foothold in Portugal with our factoring offers."
The operating result exceeded the previous year's figure of EUR 136.5 million by 18.2% and reached EUR 161.3 million. Net profit in the reporting period increased 21.1% from EUR 103.2 million in the previous year to EUR 125.0 million. Despite continued strong organic and acquisition-related growth, the cost-income ratio in the reporting year remained stable.
The Consolidated Group's balance sheet structure remained solid as per December 31, 2017. The equity ratio rose again, reaching the targeted level of 17.7%, thereby continuing to exceed our long-term goal of at least 16%.
Sebastian Hirsch, Member of the Board of Directors of GRENKE AG, specifies the earnings expectations for 2018: "We expect our solid growth to continue and a renewed increase in the Consolidated Group's net profit on a like-for-like basis in the current 2018 fiscal year."
The net profit forecast considers some important accounting changes. The IFRS 9 accounting standard will be applied for the first time as per January 1, 2018. Whereas only losses that have already occurred were recognised under the previous standard, IFRS 9 provides a new model based on expected credit losses, particularly for performing lease receivables.
"Under the new standard, we expect net profit in the range of EUR 123 million and EUR 131 million in the 2018 fiscal year. Prior to the application of IFRS 9, this would correspond to Consolidated Group net profit of between EUR 145 and 153 million. It is particularly important to note that the change to IFRS 9 and its first-time application have no effect on our contribution margins or embedded value because it represents only a change in the time when the impairment is recognised in the income statement. The Consolidated Group's overall profitability and the economic value added of our business model will, therefore, remain entirely unaffected," explains Sebastian Hirsch.
Based on our very gratifying business development in 2017 and the continued good prospects going forward, the Supervisory Board and the Board of Directors plan to propose a dividend of EUR 0.70 per share to the Annual General Meeting of GRENKE AG on May 3, 2018. In the previous year, a dividend of EUR 0.58 per share (adjusted) was distributed.
Overview of key figures (in EUR millions)
Change in %
New business GRENKE Group Leasing
New business GRENKE Group Factoring
New business SME lending business
(incl. business start-up financing)
CM2 margin on new business Leasing in %
Net profit GRENKE Consolidated Group
Cost / income ratio in %
Equity ratio in %
Consolidated Group's average number of employees
The GRENKE Consolidated Group's Annual Report for the 2017 fiscal year is available at www.grenke.de/en/investor-relations/financial-reports.
For further information, please contact:
Neuer Markt 2
Phone: +49 7221 5007-204
Internet: http://www.grenke.deAbout GRENKE
The GRENKE Group (GRENKE) is a global financing partner for small and medium-sized companies. As a one-stop shop for customers, GRENKE's products range from flexible small-ticket leasing and demand-driven bank products to convenient factoring. Fast and easy processing and personal contact with customers and partners are at the centre of GRENKE's activities.
Founded in 1978 in Baden-Baden, the Company operates in 31 countries and employs more than 1,300 staff worldwide. GRENKE shares are listed in the SDAX on the Frankfurt Stock Exchange (ISIN DE000A161N30).
Further information about GRENKE and its products is available at http://www.grenke.de
08.02.2018 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de
Neuer Markt 2
+49 (0)7221 50 07-204
+49 (0)7221 50 07-4218
Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange
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