CaaS and CarNext push up LeasePlan’s earnings, but Germany and Turkey problem childs
LeasePlan’s Car-as-a-Service (CaaS) and used-car (CarNext.com) business provided some of the strongest positives in its Q4 and annual reports released today. Another positive among the mixed results: 1.8 million vehicles on the road, +4.4% compared to 2017. But 2018 was not all good, as the company saw a strong negative financial impact from the German and Turkish markets.
LeasePlan finished the year with a strong quarterly performance. The net result for Q4 2018 was €71 million, (+12.9% compared to Q4 2017). The underlying net result was €108 million (+6.4%).
However, full-year results were mixed, with the net result at €424 million (-9.2%). LeasePlan attributes the downturn in earnings to its performance in Germany and Turkey. Impairments were taken to recognize losses in Germany related to a number of loss-making contracts (€20 million net of taxes) and in Turkey related to the depreciation of the Turkish lira and local used-car prices stemming from the recent period of economic and political volatility (€89 million net of taxes).
But LeasePlan points to a healthier underlying net result of €576 (+8.4%) – thanks to CaaS and CarNext.com. Return on equity increased from 16.7% in 2017 to 17.3% last year.
LeasePlan’s serviced fleet, operating in more than 30 countries, increased from 1.75 million vehicles at the end of 2017 to 1.82 million at the end of last year (+4.4%). That increase was driven mainly by strong demand from both the corporate and SME customer segments for CaaS. Lease and additional services (CaaS) realised an underlying gross profit of €365 million (+3.5%) in Q4. For the entire year, that figure stood at €1.49 billion (+6.6%).
Launched just a year ago, CarNext.com, LeasePlan’s online platform for used-car sales, realised a B2C volume of 13,775 vehicles in Q4 (+55%) and of around 50,000 vehicles (+65%) for the full year. It is now available for B2B and B2C customers 22 countries, supported by a network of 32 delivery stores.
CarNext’s UCaaS (Used-Car-as-a-Service) contracts totalled 1,900 (+60%) in Q4 and 8,000 (+150%) for the entire year, reflecting the growing demand for subscription services in the used-car segment.
Unconfirmed reports in the Dutch financial press say LeasePlan’s shareholders are considering selling CarNext, which in the context of LeasePlan’s cancelled IPO last year was valued €1-€2.5 billion.
Additionally, ‘The Power of One LeasePlan’, the company’s operational streamlining programme, continued to deliver benefits: €55 million in 2018, bringing the total to €185 million. A portion of that benefit will be passed on to the customer in the form of efficiencies.
“These results underscore the strength of our strategy to lead the megatrend from ownership to subscription models, for both new and high-quality used cars,” says Tex Gunning, CEO of LeasePlan. He also pointed to LeasePlan’s strengthening offer of innovative and sustainable products and services, which includes its full-package EV solution, now rolled out in 10 countries.
Looking ahead, Mr Gunning pointed to Digital LeasePlan, initialised in 2018: “It will enable us to provide best-in-class digital service to our customers at lower cost levels, and ultimately enable us to deliver ‘any car, anytime, anywhere’.”