LeasePlan
Fleet management and leasing company LeasePlan
announced that its net profit for 2007 grew by 13.4 per cent to
€239.2m (£178.2m), excluding divestments, with the overall net
result up 21.2 per cent to €255.4m (£190.2m).
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LeasePlan CEO and managing board chairman, Vahid
Daemi described the results as “excellent” and said they had
been achieved despite a “competitive environment”, leaving the
lessor in a strong position in 2008. Daemi commented that, along
with its “strong customer focus”, the results had been made
possible by LeasePlan’s “continued leveraging of the scale of [its]
business”. The company currently operates in 29 countries
worldwide, and benefits from economies of scale thanks to its size,
it claimed.
Its worldwide fleet grew by around 57,000 units to reach a
new total of 1.32m vehicles. Operating income increased from €897m
(£668m) at the end of 2006 to €940m (£700m) as of December 31 2007,
up 4.8 per cent.
LeasePlan moved into two new territories in the course of 2007,
with the launch of LeasePlan Romania and LeasePlan Turkey, the
latter of which is a JV with local partner Doðuþ Otomotiv in which
LeasePlan owns a controlling stake. Its core strategy focus led to
the disposal in the course of last year of JB Carrosserie and
Carflexs, two car body repair businesses.
Stable funding
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By GlobalDataOn the corporate funding front, LeasePlan issued €2.9bn (£2.2bn)
in debt capital markets in 2007, along with €1.9bn (£1.4bn) in
private placements and €1bn (£760m) in two public benchmark
transactions, the company announced, making it the world’s
third-largest corporate issuer of private placements. “This
position has allowed LeasePlan continued access to debt capital
markets funding throughout the credit crunch,” the company
stated.
The lessor currently has access to funds which would allow it to
write 11 months’-worth of new business, “without requiring access
to either money market or debt capital market funding whilst
repaying maturing debt when it falls due.”
In addition, LeasePlan stressed that it has “no exposure
whatsoever” to the structured investment products such as
collateralised debt obligations, residential mortgage-backed
securities or asset-backed commercial papers, some of which have
recently been the cause of much turmoil in global financial
markets.
UK outlook “very good”
In the UK, LeasePlan
had a “very busy, very good” year, said managing director David
Brennan. “The UK is one of LeasePlan’s largest markets and we
had another record year,” he said. LeasePlan UK added another 6,500
vehicles to its fleet over the course of the year, to give it a
total fleet size of 133,000 units for its 35,000 clients.
Using a loyalty measurement tool, LeasePlan UK found its
customers awarded it a score of 76, “meaning LeasePlan is above the
threshold which creates loyalty,” Brennan said, adding that
LeasePlan retained 98 per cent of its retenders with major clients
in 2007: “Our clients report they are happier than ever with our
service.”
Brennan said that LeasePlan was in a “very good position”
coming out of 2007, and that business in January had been
promising, despite the ongoing macroeconomic troubles caused by the
credit crunch.
“No-one knows what will happen in 2008 but we are keeping a
watchful eye on developments. We might have expected to see a
slowdown first of all in business from smaller and medium-sized
clients, who react more rapidly to negative economic circumstances,
rather than from major corporations who are more insulated by
virtue of their size, but so far this has not manifested itself and
customers are ordering in all channels,” Brennan reported.
He noted however that in 2008, disposal strategy was likely to
be a problem for lessors, as used car buyers begin to turn away
from three-year old cars (see p??? for more). Having a strong
financial parent will be an advantage for lessors as the cost of
money rises, Brennan said. LeasePlan is jointly owned by Volkswagen
(50 per cent), and state-owned investment vehicle Mubadala
Development Company of the United Arab Emirates (25 per cent) and
private investment conglomerate the Olayan Group of Saudi Arabia
(25 per cent).
“The market is strong at the front-end but we’re waiting to see
what will happen in the overall economic context,” Brennan
concluded.
