GRENKE CEO Dr Sebastian Hirsch after one year in office: “Successful realignment”

• Turnaround achieved and strong foundation for further profit growth with stronger new leasing business, first green benchmark bond and digitalisation programme
• “Ideally positioned to participate in market growth”
• Share buyback programme intended

Baden-Baden, November 21, 2023: Exactly one year to the day after taking office as CEO, Dr Sebastian Hirsch sees the successful completion of the turnaround at GRENKE AG. At his CEO Update event for analysts and investors today, Hirsch emphasised that the slowdown caused by the coronavirus has been overcome and the interest rate shock is now fully priced in. The digitalisation initiative launched at the beginning of this year is on track. With the successful placement of the first green benchmark bond, we again have unrestricted access to the capital market. Hirsch’s own conclusion after one year: “The realignment was successful.”

The years since the outbreak of the coronavirus pandemic have been filled with extreme direct and indirect challenges for GRENKE, such as the war in Ukraine, bottlenecks in supply chains, soaring inflation rates, interest rate hikes at record speed, economic slowdowns in many parts of the world and, most recently, geopolitical risks due to the dramatic events in the Middle East. “Not only have we weathered these crises as a team among the Board of Directors and all employees, we have used this time to significantly improve our organisation and processes,” emphasises Hirsch: “We are now well-positioned to participate in the growth of the leasing market, especially for small-ticket investments, where we intend to further expand our international market leadership.” 

Taking this into account, GRENKE will submit the necessary application to the German Federal Financial Supervisory Authority (BaFin) today to receive regulatory approval for a share buyback programme. Hirsch believes the timing is right: “Despite the positive share price performance in recent weeks, GRENKE’s current market capitalisation is still well below its book value. In the interest of our shareholders, we therefore see a buyback programme as a sensible investment decision. This will not affect our operating liquidity.”

“The Past. The Present. The Future” was the motto of today’s virtual CEO Update, in which Hirsch reviewed his first year as CEO of GRENKE AG, a position he initially took over on an interim basis and then permanently on February 16, 2023, by appointment of the Supervisory Board. His review was then followed by a look to the future. “We plan to continue pursuing our strategic roadmap and expand our growth,” stressed Hirsch, “which is why we have set ourselves ambitious targets for 2024 and beyond. A key milestone we want to achieve next year is EUR 3 billion in new leasing business. As the highest volume of new business ever achieved, this would be a record in the history of GRENKE.

High profitability also remains an important element of GRENKE’s equity story. For 2024, Hirsch expects a stable CM2 margin of around 17 percent and an increase in Consolidated Group net profit to a range of EUR 95 million to EUR 115 million. For the current financial year, the Board of Directors expects a net profit in the upper half of the guidance range of EUR 84 to 90 million. Even in face of these successes, Hirsch was modest in his comments at the CEO Update, saying, “There’s still a lot more to be done.”

“GRENKE aims to become a global pioneer for the digital leasing experience,” highlighted Hirsch. “My vision is to see leasing become a catalyst for small investments. This will accelerate innovation and the much-needed ecological transformation in the SME sector.” In February of this year, GRENKE launched its own initiative to systematically digitalise its internal processes and interfaces with some 30,000 resellers. Hirsch also reported progress in the acquisition of franchise partners. This process has been completed for all but five companies. The decision to exit the Turkish market was based on the development of the economic environment. Overall, there is a strong focus on efficiency, which next to digitalisation will continuously increase as a result of the anticipated growth in interest income. 

Strong new business is the source of future interest income, which is picking up again after the slowdown caused by the coronavirus. Here, too, the focus is on profitability with solid margins. In the first nine months, GRENKE achieved double-digit growth in new leasing business of 12 percent. Demand was particularly strong for green economy items, especially eBikes. Every fifth contract concluded was for an eBike. Green technologies in the third quarter already accounted for 23 percent of new leasing business overall, measured by the number of new contracts.

GRENKE is driving forward its international expansion with strategies tailored to the respective markets. Depending on the degree of maturity and market penetration, the focus is directed more towards development, market share gains and winning resellers (e.g. in Canada, Australia and the USA), as well as on customer retention and profitability (e.g. in Germany, France and Italy).

Hirsch also stated that GRENKE’s refinancing strategy is broader than ever. GRENKE has a sound, efficient mix of debt instruments, such as bonds, deposits and ABSs, as well as equity components, which provides sufficient flexibility for liquidity management. In September 2023, the company not only placed its first green bond but also for the first time moved into the benchmark class – the “Champions League” of debt financing. In the words of Hirsch: “I am particularly proud of this double premiere. It gives us access to the capital market, which we also need to finance our targeted growth for the next decade.” 

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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 are at the centre of GRENKE’s activities.

Founded in 1978 in Baden-Baden, the Group operates in over 30 countries and employs approximately 2,000 staff (measured in terms of full-time equivalents) worldwide. GRENKE shares are listed on the Frankfurt Stock Exchange (ISIN DE000A161N30).