Performance highlights 2019
Continuous growth
2019 was another year with growth for LeasePlan Denmark
The number of vehicles under fleet management increased by almost 3,000 units, or just over 8%. Similarly, our turnover increased by just over DKK 170m or approx. 12%.
Our 2019 results are a proofpoint of the strength and resilience of our business, as well as LeasePlan’s strategy to capitalise on the megatrend from car ownership to subscription services.
The figures reflect a picture of Denmark, where in 2019 there was a very high and rising activity level. Profit before tax was just over DKK 80m. This is a decrease of just over DKK 8m compared to 2018, but is still considered to be satisfactory, as the result must be seen in the light of:
- A continuous strong competitive market where price is seen to accelerate in a downward direction. We believe that this is partly driven by the continued decline in interest rates, the abundant access to capital, and not least the increased risk appetite within the market.
- An increase in the general cost level of more than DKK 20m compared to 2018, primarily driven by the continued strategic investment in CarNext.com
Overall, 2019 was absolutely satisfactory, both at group level and in Denmark. 2019 was characterized by a number of extraordinary investments, among others in CarNext.com, where we have experienced great growth and have established a new, huge store in Jutland.
A solid business model
LeasePlan has been present in Denmark for almost 30 years and was established globally more than 50 years ago. History has shown that good times are replaced by less good times, and as our ambition remains to be the player that defines industry developments, it is essential to ensure that we have a balanced approach to risk at all times.
This means, for example, that not everyone can become a customer of LeasePlan, which can be read in the credit quality of our portfolio. It also means that it is essential for LeasePlan that our underlying basis of our business is robust so we at any time are able to overcome any hurdles along the way in the event that the used car market suddenly falls sharply (as it did for example over 10 years ago as a result of the financial crisis and which we also see now in connection with the corona crisis).
Our approach also indicates that we always have strong and flexible capital resources as well as an appropriate solidity. Equity for LeasePlan Denmark amounts to almost DKK 700m at the end of 2019, corresponding to approx. 25% of the book value of our vehicles.
Overall, it is our assessment that LeasePlan Denmark is in a strong position at the beginning of 2020.
2019 has been characterized by great competition, which is good for everyone. Our customers benefit from this competition, not only in terms of price, but we also have to 'stay in shape' as market demands and expectations call for new products and digital services.
Another year of big investments
2019 went with major investments in CarNext.com both locally and globally. CarNext.com is selling used lease cars to consumers via physical stores and online shopping with live video presentations and home delivery or pickup as well as wholesale through auction. CarNext.com is now present in 23 countries with a total of 45 stores.
The year started off with our temporary store in Fredericia, just opened, burning down to the ground. However, the Jutland department was quickly up and running again in a mobile house.
In June 2020, a brand new store is ready to welcome customers among a selection of hundreds of used high quality cars. Despite the fire, CarNext.com in Denmark has managed to double B2C sales from 2018 to 2019, and customers have rewarded us with a Trustpilot score of 4.5 out of 5 possible stars.
Case study: ISS
Driving sustainability through our business ís keeping our clients' businesses moving
One of LeasePlan's major clients is ISS, one of the world's largest facility management companies. Founded a century ago, it has been a LeasePlan customer for more than 20 years.
Today LeasePlan and ISS are working together ever more closely. We now manage 70% of ISS’s 20,000-strong fleet, mostly commercial vehicles, across the world. The fleet is crucial to ISS’s ability to provide its huge range of services which include cleaning, catering, maintenance, support staff and security, and integrated facilities management.
LeasePlan heading for greener mobility
EV100 and ambitious targets commit, and in connection with the financial statements, we have analysed the development from 2018 to 2019 in Denmark for our fleet and the industry in general with electric cars and fuel consumption respectively.
Michael Olsen, CEO of LeasePlan Denmark: “Many large companies and public authorities want to be part of green mobility. Here is the EV100 a prime example of where organisations such as LeasePlan, IKEA, Danfoss, Grundfos, Heathrow, Ørsted and many others work together to reduce CO2 emissions.
But this doesn’t do it alone: The OEMs must also be able to deliver models that meet the increased demands, but the "third leg", the charging infrastructure, must also be able to follow.”
The number of chargers simply needs to increase significantly, and as usual it is a chicken and egg situation. Therefore, this is an invitation to take action for the responsible politicians and initiate this process. NOW
Covid-19 has changed everything
Significant disruption in the global economy
Today, the Covid-19 health crisis is causing significant disruption in the global economy. Our high-quality customer base, the long-term nature of our contracts, recurring income, strong balance sheet and diversified funding platform will help us during this period of uncertainty.
In response to the economic uncertainty and global supply chain disruption among car manufacturers, we have shifted our focus away from new vehicle purchases towards contract extensions or other mobility solutions which use our existing fleet. We are minimising our working capital, deferring non-urgent investments and have elected to add to our general reserves rather than pay out additional 2019 dividends.
Given the evolving uncertainty, it is too early at this stage too assess the financial effect of the Covid-19 crisis on LeasePlan and we have not yet set a financial target for LeasePlan Denmark for 2020.