Grenke AG (WBO:GLJ) Q2 2025 Earnings Call Highlights: Strong Leasing Performance and Strategic ...

Release Date: August 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Grenke AG (WBO:GLJ) reported a strong performance in its leasing business, with new business reaching 1.6 billion and a high CM2 margin of 17.3%, indicating strong profitability. The company successfully placed a benchmark bond, securing necessary funding for future growth. Grenke AG's customer base increased to over 690,000, and lease receivables approached 7 billion, reflecting strong market demand. The strategic acquisition of B2F is expected to enhance digital integration and online attractiveness, benefiting dealers and vendors. The company achieved a trend reversal in group earnings, with a significant profit increase in Q2, and expects continued earnings growth throughout the year.

Negative Points

Insolvencies in core markets remain elevated, posing a risk to Grenke AG's financial stability. The company's loss rate, although improved, remains higher than the previous year, indicating ongoing challenges in risk management. There is a need for continuous focus on cost efficiency to maintain the improved cost-income ratio. The gains from disposals are temporary and not expected to continue into the next year, potentially impacting future earnings. The equity ratio has slightly decreased, and there is uncertainty about the impact of franchise company acquisitions on the balance sheet.

Q & A Highlights

Warning! GuruFocus has detected 5 Warning Signs with WBO:GLJ.

Q: What caused the slight slowdown in net interest income growth compared to Q1, and what growth pace should be expected for the full year? A: Unidentified_3 (CFO): There is no specific reason for the slowdown; it's more about the timing of interest expenses, such as the benchmark bond issuance in Q2. We expect continuous growth quarter to quarter, and the overall growth pace should remain steady throughout the year.

Q: Can you explain the gains and losses from disposals and the impairment losses within the settlement of claims and risk provisions? A: Unidentified_3 (CFO): The gains from disposals are temporary and due to lower new business portfolios from four years ago. Impairment losses reflect elevated risk levels, but we expect these to normalize as we move forward.

Q: What are the expectations for net profit momentum in H2, and what could enable reaching the upper end of the net profit guidance? A: Unidentified_2 (CEO): The momentum will continue as shown in our graphs, with risk provisioning and settlement of claims being decisive. We have good visibility on income and costs, and the loss rate will determine if we reach the upper end of guidance.

Story Continues

Q: How does the equity ratio and cash management look, and what is the strategy for deploying cash? A: Unidentified_3 (CFO): We are comfortable with a 16% equity ratio, and most of our cash is with Bundesbank. We aim for a strategic equity ratio slightly below 16% due to lower goodwill levels.

Q: What is the expected operating leverage in the next 2-3 years, and how does AI and digitalization play a role? A: Unidentified_2 (CEO): We aim for less FTE growth and more efficient processes through digitalization and AI. Our business is data-driven, and we are working towards realizing these efficiencies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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