LeasePlan announces Q1 2020 results

LeasePlan has delivered decades of profitability, even throughout the financial crisis, in a market that has been resilient for more than 50 years. Our underlying net result of EUR 115 million for the first quarter is a testament to the strength and resilience of our business, our high-quality customer base, and the contractually recurring nature of our business and income streams, and includes further significant strategic investments in our operations and CarNext.com.

Today we find ourselves in unprecedented times, with the COVID-19 pandemic causing significant disruption to the global economy. LeasePlan has gone through economic crises before and has proven the resilience of its business model and profitability. As a regulated business, our experienced team was well prepared to manage the impact of the Coronavirus and took swift and decisive steps to ensure the safety of our employees and minimize the impact on our business and customers.

As soon as the crisis hit, we immediately prepared a liquidity plan based on a range of scenarios to see us through the coming period. LeasePlan has a liquidity buffer of EUR 6.7 billion in Q1 2020, highlighting the strength of our diversified funding platform, which gives us access to many sources of funding, from bank deposits to asset backed securities and unsecured debt capital markets. This was evidenced by the successful placement of a EUR 500 million green bond in April 2020.

As part of our liquidity planning and broader COVID-19 response plan, we also took decisive action to reduce our used-car inventory prior to the implementation of wide-spread lockdowns across Europe and focus on contract extensions. Given that we expect the used-car market to be depressed in the near-term, we decided to take a valuation allowance on our used-car inventory and an impairment on our lease contracts, in total EUR 87 million.

With our resilient business model, we are continuing to support customers with their mobility needs and helping to address issues caused by OEM factory closures by offering customers contract extensions on current vehicles or vehicles from CarNext.com. While the vast majority of our clients are in the corporate segment, we have also set up programmes to support customers in our smaller SME and private segments.

Looking ahead, we have established a ‘What’s next’ team to prepare for life after the crisis and ensure we continue to capitalize on the long-term ownership to subscription megatrend that has been driving the structural growth of our industry for the past 50 years. This will be accelerated by our ongoing Digital LeasePlan transformation, which is enabling us to build a fully digital operating model, delivering digital services at digital cost levels.

In the face of testing personal circumstances, LeasePlanners across the world have demonstrated tremendous experience and competence in dealing with the crisis. This is a testament to our history of more than 50 years and I would like to thank them for their leadership, commitment and support. Together, we have taken decisive steps to ensure that LeasePlan has maximum room for manoeuvre in the months ahead and will be well placed to emerge strongly from the crisis when it passes.