- Net Income Group Share: EUR189 million.
- Margins: 539 bps of earning assets, up by 17 bps compared to Q1 2024.
- Underlying Used Car Sales Result: EUR1,480 per unit.
- Cost to Income Ratio: Improved by six percentage points quarter-on-quarter to 61.9%.
- Return on Tangible Equity: 9.6%.
- Bond Issuance: EUR750 million issued in July 2024.
- Deposits: Increased to EUR13 billion, up by close to EUR300 million over the quarter.
- CET1 Ratio: 12.5% at the end of June, up from 12.3% at the end of Q1 2024.
- Synergies from LeasePlan Integration: EUR27 million in Q2, an increase of EUR7 million compared to Q1 2024.
- Earning Assets: Increased by 9.5% year-on-year to EUR53.2 billion.
- Total Fleet: Remained broadly flat year-on-year at 3.4 million vehicles.
- EV Penetration: 39% in Q2 2024, with battery EV penetration at 26% and plug-in hybrids at 13%.
- Gross Operating Income: EUR7,785 million, down 1% compared to Q1 2024.
- Margins on Leasing and Services: EUR694 million in Q2 2024, with an underlying increase of 4.6% quarter-on-quarter.
- Operating Expenses: Down quarter-on-quarter by 3%, with underlying operating expenses decreased by 4.3% compared to Q1 2024.
- Cost of Risk: EUR31 million, down from EUR33 million in Q1 2024.
- Effective Tax Rate: 25.5%, lower than the previous quarter.
- Net Income Group Share (After Restatement): EUR96 million, an increase of EUR17 million compared to Q1 2024.
- RWAs: Decreased to EUR57.8 billion from EUR59 billion in Q1 2024.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ayvens (STU:3AL, Financial) reported a solid Q2 2024 financial performance with a net income group share of EUR189 million.
- Margins improved to 539 basis points of earning assets, up by 17 basis points compared to Q1 2024.
- The integration of LeasePlan is progressing well, contributing EUR27 million of synergies in Q2 2024.
- The company's capital position is strong with a CET1 ratio of 12.5% at the end of June 2024, up from 12.3% at the end of Q1 2024.
- Ayvens (STU:3AL) has successfully issued EUR750 million of bonds, completing 80% of its annual funding program.
Negative Points
- Demand slowed in a mixed economic environment, impacting the overall growth pace.
- The used car sales result showed a moderate decrease, reflecting ongoing normalization in the market.
- The number of fleet management contracts decreased by 4.9% compared to the end of June 2023.
- The order intake of battery electric vehicles is slowing down as residual values have been lowered.
- The company had to make accounting adjustments, including a EUR14.7 million goodwill impairment for a German subsidiary.
Q & A Highlights
Q: The 539 bps margin on earning assets is impressive. Is there scope to increase that margin ambition, or will it flatline at this level for the next few quarters?
A: (Tim Albertsen, CEO) We are happy with the margin development but have consciously slowed down growth. We aim to stay flat as a minimum in 2025 and may need to be more aggressive in the market. (Patrick Sommelet, CFO) The improvement in margin is due to pricing on new contracts and better calculation on existing contracts. We do not change our overall margin estimation for the full year.
Q: Can you provide more detail on your strong export capabilities for remarketing used vehicles?
A: (Tim Albertsen, CEO) We export 50% of our EVs due to varying market performances. The LeasePlan acquisition has enhanced our efficiency in finding the right dealers across Europe, helping manage EV pricing challenges.
Q: Could you provide more color on the nonrecurring items, especially the mark-to-market of derivatives and breakage revenues?
A: (Patrick Sommelet, CFO) The breakage revenues are related to treasury operations and the renegotiation of loans, which are accounted for at historical cost. The mark-to-market impact is due to the difference between market rates and historical costs.
Q: Regarding your EV strategy, are you confident that you are not making losses on EVs anymore?
A: (Tim Albertsen, CEO) We feel comfortable with the residual values we are setting and are developing mitigating factors like longer durations and re-leasing vehicles. We are also working to industrialize our capacity to keep EVs in our books for multiple leasing rounds.
Q: How soon do you expect to see funded fleet growth again?
A: (Tim Albertsen, CEO) It typically takes four to six months to see results from new initiatives. We anticipate slight fleet growth for the rest of the year and aim to stay flat or grow slightly in 2025.
Q: Can you talk about service margins and their sustainability?
A: (Patrick Sommelet, CFO) Service margins are improving due to better penetration of insurance revenues and procurement synergies. Leasing margins are also behaving well, and we are seeing a decrease in wholesale funding costs.
Q: What can we expect for the cost to achieve (CTA) in the second half of the year and in 2025?
A: (Patrick Sommelet, CFO) We expect CTA to be slightly lower in the second half of 2024 due to some IT integration being postponed to H1 2025. It's too early to give specific numbers for 2025.
Q: What percentage of EV leases are being re-leased, and what percentage of new contracts have longer durations?
A: (Tim Albertsen, CEO) The duration of new EV orders is increasing significantly. In countries where we have built capacity, we see that 10-20% of EVs are being re-leased, which helps mitigate residual value risk.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
