Grenke AG reports Q3 results with new business growth

Grenke AG, a financing partner for small and medium-sized enterprises worldwide, today confirmed its preliminary income statement figures for Q3 and the first nine months of 2024, initially released on October 29th, and has now published its comprehensive quarterly statement.

For the first nine months of 2024, Grenke reported Group earnings of €57.0 million, reflecting an 11.5% decline compared to €64.4 million in the same period of 2023. This decrease was primarily attributed to elevated expenses for claims settlements and increased risk provisions due to rising insolvencies, particularly in the company’s core markets of France, Spain, and Germany. As a result, the loss rate rose to 1.3%, up from 1.0% in the first three quarters of 2023. Additionally, the cost-income ratio (CIR) climbed to 58.4%, compared to 57.9% a year earlier, influenced by a €4.4 million goodwill impairment of the Spanish subsidiary in the third quarter.

Despite headwinds, Grenke achieved notable growth in leasing activities, with lease receivables reaching a record €6.2 billion by the end of Q3 2024, surpassing the €5.5 billion level reported at the end of Q3 2023. The company’s leasing new business surged by 24.9% in Q3 2024, totalling €738.5 million compared to €591.1 million in Q3 2023.

Grenke CEO Dr. Sebastian Hirsch emphasised the necessity of increased risk provisions while maintaining confidence in the company’s strategic direction.

“Our business model is proving successful, and the development of new business is progressing as planned,” Hirsch stated, expressing optimism about the role of growing lease receivables in driving future earnings growth.

CFO Dr. Martin Paal highlighted the company’s ambition to achieve €3 billion in new business for the first time, supported by favourable market conditions and robust cost management.

Paal noted that recent financing efforts, including a successful €500 million benchmark bond, have strengthened Grenke’s position for future expansion.

As of September 30, 2024, Grenke’s liquidity increased to €1.2 billion, up from €0.7 billion at the end of 2023, primarily due to the €500 million benchmark bond placement. Concurrently, refinancing liabilities rose to €4.6 billion from €3.8 billion. This growth led to an equity ratio of 16.1% as of the reporting date, down from 19.1% at the close of 2023. The company anticipates maintaining an equity ratio of at least 16% in Q4 2024.

The return on equity (RoE) before taxes declined to 4.7% in Q3 2024, compared to 9.1% in Q3 2023. For the first nine months of 2024, RoE stood at 7.3%, down from 8.2% in the prior-year period.

Outlook for 2024

Grenke remains on track to achieve leasing new business between €3.0 billion and €3.2 billion for the year, with projected Group earnings between €68 million and €76 million. The company expects a slight year-on-year increase in the CM2 margin and a medium-term target of approximately 17%. Grenke also aims to reduce the cost-income ratio below 58% through its ongoing digitalisation initiatives and anticipates maintaining an equity ratio above 16% as Group earnings develop.