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LeasePlan publishes results for first half of 2015

Written by | Posted on 26.08.2015
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LeasePlan

LeasePlan Corporation N.V., the world’s leading fleet management and driver mobility company, today announces its results for the first half year (H1) of 2015.

Financial highlights H1:
•Net profit increased by 21% to EUR 245.7 million (H1 2014: EUR 202.3 million)
•Healthy capital and liquidity position: Common equity tier 1 ratio at 17.5% (17.2% at year-end 2014 and 17.9% at H1 2014); liquidity buffer at EUR 4.3 billion at half year-end
•LeasePlan Bank retail deposits increased to EUR 5.0 billion in H1 2015 (EUR 4.3 billion at year-end 2014 and EUR 4.2 billion at half-year end 2014)
•Total assets: EUR 20.5 billion in H1 2015 (EUR 19.7 billion at year-end 2014; EUR 18.6 billion at half year-end 2014)

Operational highlights H1:
•Accelerated growth of number of vehicles under management to 1.49 million at half year-end 2015 (1.42 million at year-end 2014 and 1.38 million at half year-end 2014), confirming LeasePlan’s global market leadership
•Further global roll-out of innovative solutions such as telematics and corporate car sharing
•LeasePlan became 100% owner of LeasePlan Turkey

Key numbers H1:

Key figures Interim Report 2015

Vahid Daemi, CEO of LeasePlan: “In the first six months of 2015 LeasePlan has continued the upward trend witnessed in previous reporting periods. Thanks to an acceleration of global growth in our fleet, achieving a year-on-year increase of almost 8%, we have reached a new milestone of almost 1.5 million vehicles worldwide. This strong performance is the result of our investment in growing market segments such as SMEs as well as our commitment to meeting our customers’ mobility needs with new and innovative solutions such as flexible leasing and telematics. With the same level of drive and commitment that has been our hallmark for the last 52 years, we will continue our strategy of balanced growth, leveraging our global presence by investing in services that are designed to work in many markets around the world, to the benefit of our customers.”

Financial performance

LeasePlan’s net profit increased by 21% from EUR 202 million in H1 2014 to EUR 246 million in the first six months of 2015. Main contributors were an acceleration of the growth of the total fleet under management to almost 1.5 million vehicles and a continuation of the favourable market circumstances for well-maintained ex-lease vehicles.

LeasePlan conducts most of its business in euros. As a result of the depreciation of the euro versus other currencies, net profit includes a EUR 6 million positive impact of currency translation effects.

Total assets increased to EUR 20.5 billion in the first half of 2015, compared to EUR 19.7 billion at year-end 2014. This increase is mainly a result of volume growth, the consolidation of LeasePlan Turkey and currency developments.

Operational performance

Fleet size

Since the end of 2014, LeasePlan’s fleet has increased by 70,000 vehicles in the first half of 2015 to a record level of almost 1.5 million vehicles. Comparing June 2015 with June 2014, year on year growth was almost 8%.

Growth was witnessed across all regions, ranging from mature leasing markets such as Australia, the United Kingdom, Germany, the US and the Netherlands to emerging leasing markets such as Mexico and Turkey. Furthermore in Turkey, LeasePlan acquired full ownership of the local entity.

Over the years LeasePlan has invested in new, innovative service offerings for the segment of small and medium-sized enterprises (SMEs) and this is now the fastest-growing segment within the company.

Meanwhile LeasePlan International (LPI), the dedicated entity managing the accounts of large international clients, has continued to expand its business through existing and new clients. LPI recently surpassed the threshold of 400,000 vehicles under management, representing almost 30% of the total LeasePlan fleet.

Business mobility

LeasePlan has a strong track record in improving the productivity, profitability and environmental performance of its vehicle fleets. At the same time the company has gradually introduced new services focused on the safety, well-being and efficiency of the individual driver. Telematics is a good example of such a service. The use of telematics leads to improved driver safety, fewer accident claims, an increase in the recovery rate of stolen vehicles and a considerable reduction in fuel consumption and hence CO2 emissions. LeasePlan recently signed a contract with a large international client to implement telematics solutions for its 7,000 vehicles, in 23 countries by the end of 2015.

In response to economic, social and demographic trends, LeasePlan aims to be a ‘one-stop shop’ for business mobility, offering different products and services which go beyond the traditional lease product and fully meet the mobility needs of its clients. LeasePlan is starting to roll out its innovative corporate car sharing solutions on a global level, including an online booking and key-management portal for vehicles. This will allow employees who occasionally require a company car to easily reserve and use a vehicle that has no dedicated driver.

As part of its business mobility strategy LeasePlan is also targeting new client groups such as rental companies as a natural extension of the current business, adding expertise in areas such as full-operational lease, procurement and maintenance & repairs.

Another focus area is the fast-growing market of light commercial vehicles (LCVs). LeasePlan recently organised its first LCV event for international clients in the Netherlands. LeasePlan is already a strong player in this market in countries such as the UK, Belgium and Germany, bringing to the table knowledge regarding driver behaviour management, cost management, insurance and reducing vehicle off-road time.

Ownership of LeasePlan

In March 2015 LeasePlan announced that its 100% shareholder Global Mobility Holding B.V. (GMH) had entered into discussions regarding the potential divestment of the company. Shortly after the closing of the books over the first six months of 2015, GMH reached an agreement with a consortium of long-term investors to acquire full ownership of LeasePlan. The agreement is subject to approval by the relevant regulatory and anti-trust authorities including the European Central Bank in consultation with the Dutch Central Bank. Closing is expected by the end of 2015.

Healthy capital & Liquidity position

LeasePlan’s Common equity tier 1 ratio remained firmly above the regulatory capital requirements at 17.5% (17.2% at year-end 2014 and 17.9% in H1 2014).

Over the first half of 2015, LeasePlan’s diversified funding strategy has been demonstrated to work despite blackout periods as a consequence of the discussions around the anticipated change of ownership. Funding was successfully obtained from various sources, such as private senior unsecured transactions of EUR 0.6 billion and the extension of the revolving period of the secured transaction ‘Bumper France’ to June 2016. The company also concluded a term loan of EUR 1.0 billion. This term loan was due to mature in March 2016 but was extended in July 2015 and now matures in September 2017.

The amount of retail deposits entrusted to LeasePlan Bank in the Netherlands increased by EUR 0.7 billion from EUR 4.3 billion at year-end 2014 to EUR 5.0 billion at half year-end 2015. LeasePlan continuously strives to further strengthen its diversified funding base. As part of this approach, German savers will be able to open a LeasePlan Bank savings account as of September 2015.

LeasePlan’s revolving credit facility has been refinanced with a group of 12 banks for an amount of EUR 1.25 billion, maturing in December 2018. Furthermore the credit facility with Volkswagen AG (amounting to EUR 1.25 billion) has been renewed, maturing in December 2018. At half year-end these facilities, together with LeasePlan’s cash balances, resulted in a very robust liquidity buffer of more than EUR 4.3 billion.

Following the recent announcement that an international consortium of long-term investors intends to acquire full ownership of LeasePlan, rating agencies have taken rating actions and placed ratings under review. The current ratings for LeasePlan’s long-term senior debt are: Fitch A- (RW Negative), Moody’s A3 (RuR Negative) and S&P BBB (CW Negative). Both S&P and Fitch have indicated that the downside risk is likely to be limited to one notch. Final rating outcomes are expected near closing of the acquisition. The consortium plans to maintain LeasePlan’s diversified funding strategy going forward, supported by its investment grade rating.

Outlook for the second half of 2015

LeasePlan expects the overall positive business momentum as witnessed in the first half of 2015 to be sustained in the remainder of the year. The strength of the recovery of local economies will continue to differ and the associated strong currency movements will endure. However, in view of a resilient second-hand vehicle market and a strong focus on volume growth, LeasePlan is confident that it will continue to achieve good results over the remaining six months of 2015.

You can view or download the Interim Report here.

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