GRENKE generates highly profitable new business in the first quarter despite volatile interest rate environment

GRENKE generates highly profitable new business in the first quarter despite volatile interest rate environment

• New leasing business in line with plan in Q1 2023 with 22.2% year-on-year growth to EUR 610.2 million (Q1 2022: EUR 499.2 million)
• Contribution margin 2 (CM2) increases 22.6% to EUR 102.0 million (Q1 2022: EUR 83.2 million); CM2 margin of 16.7% has already returned to early 2022 level (Q1 2022: 16.7%)

Baden-Baden, April 5, 2023: GRENKE AG, a global financing partner for small and medium-sized enterprises, recorded another strong increase in its new leasing business in the first quarter of this year and, at EUR 610.2 million, exceeded the volume in the same prior-year quarter by 22.2% (Q1 2022: EUR 499.2 million). As a result, Q1 2023 marked the sixth consecutive quarter with significant double-digit year-on-year growth. The CM2 increased to EUR 102.0 million in Q1 2023, up 22.6% versus the first quarter of the prior year (Q1 2022: EUR 83.2 million). The CM2 margin was higher quarter-on-quarter (Q4 2022: 15.5%) and, at 16.7%, it exceeded the average level for 2022 as a whole (16.1%), returning to the level prior to the sharp rise in interest rates in early 2022.

"The market for lease financing in the small-ticket segment, as well as the demand, is very solid," highlights Dr Sebastian Hirsch, CEO of GRENKE AG. "Even more importantly, however, is our positive margin development. We have now been able to pass on the majority of last year's enormous interest rate increase to the market and have already returned to the level we had in early 2022. We have thus proven once again that we can operate very profitably while still generating significant growth in our new business, even in a highly challenging interest rate environment."

All regions record growth in new leasing business

The strongest growth was again achieved in Northern and Eastern Europe with 36.0%. Growth in new leasing business was particularly strong in the United Kingdom and Finland at 45.6% and 42.6%, respectively. The Western Europe region (without DACH) recorded new leasing business of EUR 161.8 million and, with an increase of 22.8%, was significantly above the same prior-year quarter (Q1 2022: EUR 131.8 million). The countries reporting the strongest growth were France (+18.0%) and the Netherlands (+48.6%). Western Europe (without DACH) was the largest region measured in terms of new leasing business. The Southern Europe region achieved a plus of 14.0% to EUR 150.4 million. Italy and Spain showed solid and planned growth of 12.5% and 2.1%, respectively. In the DACH region, GRENKE generated new leasing business of EUR 143.1 million in the reporting period, which was 21.2% above the previous year's level (Q1 2022: EUR 118.0 million). Austria stood out with strong growth of 132.1%, mainly due to the launch of the eBike business, and Germany achieved a plus of 16.6% year-on-year. The other regions achieved a year-on-year increase of 17.6%. Across all markets, the strong growth was largely a result of forging relationships with new distributors and expanding our existing relationships with resellers.

Demand continues to rise

Demand continued to rise in the reporting period. With around 150,000 lease applications, GRENKE received significantly more applications in Q1 2023 than in the same quarter of the previous year (Q1 2022: around 130,000). In total, GRENKE concluded over 69,000 new lease contracts in the first three months of the year. The conversion rate compared to the same prior-year quarter remained stable at 45.6% (Q1 2022: 46.0%) and was in line with the customary level of business.

The average ticket size increased slightly year-on-year by 8.9% to around EUR 8,800. This was just a slight increase over the full-year figure for 2022 of around EUR 8,600. The share of direct sales in the reporting period remained constant at 16.9% (Q1 2022: 16.8%).

Factoring business increases slightly, with GRENKE Bank remaining a key pillar of refinancing

The Factoring segment achieved a new business volume of EUR 192.0 million in the reporting period, corresponding to a year-on-year increase of 9.7% (Q1 2022: EUR 175.1 million).

GRENKE Bank's new microcredit business amounted to EUR 12.8 million in the first quarter of 2023 (Q1 2022: EUR 15.8 million). Most importantly, GRENKE Bank remains a key pillar for the Consolidated Group's refinancing mix. The deposit business as of March 31, 2023 amounted to EUR 1,427 million, for an increase of around 24.0% compared to December 31, 2022 (deposit volume as of December 31, 2022: EUR 1,151 million).

Overview of new business development (in EUR millions)

Leasing regions: 
DACH: Germany, Austria, Switzerland
Western Europe without DACH: Belgium, France, Luxembourg, Netherlands
Southern Europe: Croatia, Italy, Malta, Portugal, Slovenia, Spain
Northern | Eastern Europe: Denmark, Finland, Ireland, Latvia, Norway, Sweden, UK | Czechia, Hungary, Poland, Romania, Slovakia
Other regions: Australia, Brazil, Canada, Chile, Singapore, Turkey, UAE, USA

Factoring regions: 
DACH: Germany, Switzerland
Northern | Eastern Europe: Ireland, Hungary, Poland, UK
Southern Europe: Italy, Portugal

A short interview with the CEO Dr Sebastian Hirsch providing an update on new business can be accessed at the following link: https://youtu.be/uUiLzl2Jyc8

The Q1 2023 report will be published on May 11, 2023.

For further information, please contact:

About 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 Group operates in 33 countries and employs approximately 2,000 staff (measured in terms of full-time equivalents) worldwide. GRENKE shares are listed in the SDAX on the Frankfurt Stock Exchange (ISIN DE000A161N30).