LeasePlan announces Q3 2018 results
AMSTERDAM, the Netherlands, 13 November 2018 – LeasePlan Corporation N.V. (LeasePlan; the “Company”), one of the world’s leading Car-as-a-Service (“CaaS”) companies, today reports its Q3 results.
Q3 2018 financial highlights1
- Net result down 48% to EUR 67 million due to Turkey fleet impairment of EUR 73 million2
- Underlying net result up 6.0% to EUR 147 million excluding Turkey impairment
- Serviced fleet growth up 6.8% to 1.8 million vehicles
- Lease & Additional Services (“Car-as-a-Service”) Gross Profit up 8.8% (excluding impairment)
- CarNext.com B2C car volumes up 75% with 25% run-rate B2C sales penetration and 160% growth in Used Car-as-a-Service (UCaaS) to 2,100 cars
- Continued results improvement from “The Power of One LeasePlan” programme
- Underlying return on equity over the first 9 months of 17.2% excluding Turkey impairment3
Key numbers
| Q3 2018 | Q3 2017 | 9M 2018 | 9M 2017 | |
| Profitability | ||||
| Underlying net result (EUR million) | 742 | 139 | 3723 | 431 |
| % Y-o-Y growth | (47.0%) | (13.6%) | ||
| Net result (EUR million) | 67 | 129 | 353 | 404 |
| % Y-o-Y growth | (48.0%) | (12.6%) | ||
| Underlying return on equity | 14.3%4 | 16.6% | ||
| Volume (thousands) | Q3 2018 | Q3 2017 | 9M 2018 | 9M 2017 |
| Serviced Fleet | 1,822 | 1,706 | ||
| % Y-o-Y growth | 6.8% | |||
| # vehicles sold | 64 | 62 | 195 | 196 |
| % Y-o-Y growth | 4.6% | (0.9%) |
Due to rounding, numbers presented throughout this release may not add up precisely to the totals provided. Percentages are calculated based on un-rounded numbers.
Tex Gunning, CEO of LeasePlan:
“LeasePlan has delivered another quarter of strong growth across both of our businesses as we continue to lead the megatrend from ownership to subscription in the Car-as-a-Service markets for both new and used cars.
In our Car-as-a-Service business for new cars, which operates under the LeasePlan brand, our serviced fleet was up 6.8% to 1.8 million vehicles. During the quarter, we also signed an exclusive memorandum of understanding with SAIC – China’s largest vehicle manufacturer - to bring the first full electric light commercial vehicle in its category to continental Europe, accelerating the shift to zero emission mobility among commercial drivers. This partnership shows how a major global OEM entering Europe has chosen our Car-as-a-Service model rather than traditional retail dealer models to deliver their cars and puts LeasePlan at the core of this evolution.
CarNext.com, our disruptive, digital, used-car marketplace, has continued to grow rapidly and is now present in 18 countries through an integrated online platform and 28 Delivery Stores. B2C volumes increased 75% in the quarter, while our innovative Used-Car-as-a-Service proposition grew 160% to 2,100 newly contracted cars in Q3.
Our overall results were impacted by the exceptional depreciation of the lira in Turkey, the only country where LeasePlan has meaningful transactional currency exposure. We have taken clear actions in Turkey to mitigate exposure to currency volatility for new business.”
Group performance
| In millions of euros, unless otherwise stated | Q3 2018 | Q3 2017 | 9M 2018 | 9M 2017 |
| Lease & Additional Services income | 1,640 | 1,625 | 4,889 | 4,843 |
| Vehicles sales & End-of-contract fees | 751 | 698 | 2,304 | 2,178 |
| Revenues | 2,391 | 2,323 | 7,193 | 7,021 |
| % Y-o-Y growth | 2.9% | 2.4% | ||
| Underlying direct cost of revenues | 2,073 | 1,939 | 6,090 | 5,838 |
| Lease Services (ex-impairments) | 155 | 146 | 462 | 433 |
| Impairment | (84) | − | (114) | − |
| Fleet Management & other Services | 73 | 66 | 217 | 209 |
| Repair & Maintenance Services | 76 | 67 | 241 | 222 |
| Damage and Insurance Services | 67 | 60 | 204 | 180 |
| Lease & Additional Services | 287 | 341 | 1,010 | 1,045 |
| Lease & Additional Services (excl impairment) | 371 | 341 | 1,124 | 1,045 |
| % Y-o-Y growth | 8.8% | 7.6% | ||
| End of Contract fees | 35 | 28 | 94 | 88 |
| Profit/loss on disposal of vehicles | (4) | 14 | (1) | 50 |
| Profit/loss on disposal of vehicles & End of Contract fees | 31 | 43 | 93 | 138 |
| Underlying gross profit | 318 | 384 | 1,103 | 1,183 |
| As a % of Revenues | 13.3% | 16.5% | 15.3% | 16.9% |
| % Y-o-Y growth | (17.1%) | (6.8%) | ||
| Underlying total operating expenses | 217 | 207 | 634 | 627 |
| As a % of Revenues | 9.1% | 8.9% | 8.8% | 8.9% |
| Share of profit of investments accounted for using the equity method | 1 | (0) | 3 | 2 |
| Underlying profit before tax | 103 | 176 | 471 | 558 |
| As a % of Revenues | 4.3% | 7.6% | 6.6% | 8.0% |
| Underlying tax | 29 | 37 | 99 | 128 |
| Underlying net result | 74 | 139 | 372 | 431 |
| As a % of Revenues | 3.1% | 6.0% | 5.2% | 6.1% |
| % Y-o-Y growth | (47.0%) | (13.6%) | ||
| Underlying adjustments | (6) | (10) | (19) | (27) |
| Reported net result | 67 | 129 | 353 | 404 |
| As a % of Revenues | 2.8% | 5.6% | 4.9% | 5.8% |
| % Y-o-Y growth | (48.0%) | (12.6%) |
Due to rounding, numbers presented throughout this release may not add up precisely to the totals provided. Percentages are calculated based on un-rounded numbers.
Financial performance
Serviced fleet grew 6.8% in Q3 to 1.82 million vehicles.
Growth in revenues was up 2.9% in Q3 to EUR 2,391 million. Lease & Additional Services income in Q3 grew 0.9% to EUR 1,640 million or 1.6% on a constant currency basis due to growth in the fleet and increased uptake of services. Vehicle Sales and End-of-Contract Fees were up 7.6% to EUR 751 million.
Underlying gross profit was up 14.7% to EUR 402 million in Q3, excluding the EUR 84 million pre-tax impairment of the Turkish fleet. Lease & Additional Services was up 8.8% to EUR 371 million on the same basis, driven by growth across all services and supported by ‘The Power of One LeasePlan’ operational excellence programme. Profit-and-Loss on Disposal of Vehicles & End of Contract Fees decreased by EUR 12 million in Q3 and continued to be impacted by the predictable normalisation of the Profit/Loss on Disposal of Vehicles (as communicated in previous quarters).
Underlying operating expenses were up 4.4% in Q3 to EUR 217 million and included operating expenses to support the longterm growth initiatives Digital LeasePlan and CarNext.com.
The underlying tax rate in Q3 was 28.2%, impacted by the Turkey impairment tax effect and partly offset by lower headline tax rates in some countries.
Underlying net result increased EUR 8 million or 6.0% to EUR 147 million excluding the Turkey impacts, reflecting LeasePlan’s Car-as-a-Service strong performance and the ongoing benefits of ‘The Power of One LeasePlan’ operational excellence Programme. Underlying net result decreased 47% in Q3 to EUR 74 million, as a result of the EUR 73 million of Turkey fleet impairment impact.
Underlying Return on Equity (ROE) over the first 9 months before the Turkey impairment was up 59 bps to 17.2% (14.3% including Turkey impairment).
Impairment Turkish Fleet
Turkey is the only country in which LeasePlan has meaningful transactional foreign exchange exposure, specifically on the resale value of its vehicles. Until recently, local market convention has been to price lease contracts in euro, whereas vehicles at contract-end are sold in lira. The exceptional period of economic and political volatility in Turkey in the summer of 2018 and the resulting overall depreciation of the lira has led to decreasing prices of used cars in euro terms. The EUR 84 million pre-tax impairment represents the lower residual value in euro expected for current euro denominated contracts on LeasePlan’s fleet in Turkey. In addition, LeasePlan has implemented ongoing mitigating actions, such as lease extensions, used Car-as-a-Service offerings, and pricing new business in Turkish lira to mitigate further transactional currency exposure.
Business and operational highlights
Car-as-a-Service
LeasePlan’s Car-as-a-Service business for new cars showed strong growth, particularly in our Corporate and SME segments in Europe. In addition, in September 2018, LeasePlan announced the signing of a Memorandum of Understanding for a partnership with SAIC Mobility Europe. Under the exclusive partnership, LeasePlan will provide operational leasing solutions for SAIC’s Maxus zero emission electric LCVs in continental Europe, accelerating the shift to zero emission mobility among commercial drivers. The agreement centres on the Maxus EV80, as well as new line extensions. The Maxus EV80 is the first full electric LCV in its category that can be delivered at scale and has a competitive total cost of ownership compared to internal combustion engine LCVs. The partnership underlines LeasePlan’s commitment to playing a key role in the transition to sustainable mobility across all of its customer segments.
CarNext.com
CarNext.com, LeasePlan’s fast-growing digital pan-European used car marketplace, continued its strong disruptive growth in both the B2B and B2C segments, with total car sales up 4.1% to 64,700. B2C volumes grew by 75% in Q3, to 13,250 vehicles compared to 70% in the previous quarter. Our integrated pan-European B2C marketplace was operational in 18 countries at the end of Q3 (up from 15 countries in the second quarter), supported by a network of 28 Delivery Stores (up from 24 in the previous quarter). Our innovative Used Car-as-a-Service grew by 160% to 2,100 newly contracted vehicles in Q3, compared to 800 in Q3 2017, and is now available in 14 countries. B2C penetration increased to a run-rate of 25% of total cars coming off lease and sold by LeasePlan in September from 17% in Q2. In B2B, LeasePlan successfully launched the CarNext.com marketplace app for professional buyers across 28 countries, allowing seamless bidding on any car, anytime, anywhere.
Funding and capital position
LeasePlan has continued to benefit from its diversified funding platform, raising a total of EUR 726 million across retail deposits, senior unsecured and secured debt. A total of EUR 459 million was raised across six separate currencies through numerous privately placed senior unsecured debt transactions. In secured funding, LeasePlan successfully negotiated an increase to its existing warehouse facility in Australia. EUR 103 million in total was raised in new local loan facilities to fund LeasePlan’s operations worldwide. In addition, LeasePlan Bank saw an increase in retail deposits of EUR 139 million, bringing its total amount on deposit to approximately EUR 6.5 billion.
LeasePlan’s liquidity and capital positions remain strong, with a liquidity buffer of EUR 4.6 billion consisting of cash balances, as well as access to its committed revolving credit facility and a CET 1 capital ratio of 17.9%, well above regulatory requirements.
LeasePlan Corporation N.V. has declared an interim dividend in the amount of EUR 171.4 million, or 60.0% of its reported net income over the first half year of 2018.
Contact details
Media
Harmen van der Molen
T: +31 (0)6 50732424
E: media@leaseplancorp.com
Debt Investors
Paul Benson
T: +353 (1)680 4005 M: +353 (0)86 817 5152
E: paul.benson@leaseplan.com
About LeasePlan
LeasePlan is a leader in two large and growing markets: Car-as-a-Service for new cars, through its LeasePlan business, and the high-quality three-to-four year old used car market, through its CarNext.com business. LeasePlan’s Car-as-a-Service business purchases, funds and manages new vehicles for its customers, providing a complete end-to-end service for a typical contract duration of three to four years. CarNext.com is a pan-European digital marketplace for high-quality used cars seamlessly delivering any car, anytime, anywhere and is supplied with vehicles from LeasePlan’s own fleet as well as third-party partners. LeasePlan has 1.8 million vehicles under management in over 30 countries. With over 50 years’ experience, LeasePlan's mission is to provide what’s next in mobility via an ‘any car, anytime, anywhere’ service – so our customers can focus on what's next. Find out more at www.leaseplan.com/corporate.
Disclaimer
Financial and other information in this document may contain certain forward-looking statements (all statements other than those made solely with respect to historical facts) based upon beliefs and data currently available to management. These statements are based on a variety of assumptions that may not be realised and are subject to significant business, economic, legal and competitive risks and uncertainties. Our actual operations, financial conditions, cash flows and operating results may differ materially from those expressed or implied by any such forward-looking statements and we undertake no obligation to update or revise them.
1 % refer to year-on-year growth unless otherwise stated
2 Post-tax 73 million (comprising impairment of EUR 84 million pre-tax in Q3 and tax effect of EUR 11 million in Q3)
3 Post-tax 96 million (comprising impairments of EUR 30 million in Q1, EUR 84 million in Q3 and tax effects of EUR 7 million in Q1 and EUR 11 million in Q3)
4 Underlying return on equity 17.2% excluding Turkey impairment
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