ARVAL 2020 FULL YEAR RESULTS
Rueil-Malmaison, 10 March 2021
|ARVAL OUTPERFORMED THE MARKET DESPITE THE HEALTH CRISIS AND BECAME THE EUROPEAN LEADER IN FULL SERVICE LEASING1
LEASED FLEET: +6.4% vs. 31/12/2019
|INCREASE IN GROSS OPERATING INCOME
GROSS OPERATING INCOME: +3.5% vs. 2019 +5.8% including Greenval Insurance2
|GOOD CONTROL OF OPERATING EXPENSES GENERATING IMPROVEMENT OF COST INCOME RATIO
OPERATING EXPENSES: +1.3% vs. 20193
COST INCOME: 53.5% vs 54.7% in 2019
51.5% vs 53.8% including Greenval Insurance2
|CONTROLLED INCREASE IN THE COST OF RISK
+64.5% vs. 2019 (+10 bp4)
|RISE OF COMBINED NET INCOME
NET INCOME5: €471.4m (-0.6% vs. 2019)
NET INCOME5 INCLUDING GREENVAL INSURANCE: €518.6m (+3.9% vs. 2019)
|GOOD BUSINESS GROWTH DESPITE THE HEALTH CRISIS RISE OF NET INCOME SHOWING THE BUSINESS MODEL’S STRENGTH|
The Board of Directors of Arval Service Lease met on 8 March 2021. The meeting was chaired by Alain van Groenendael and the Board endorsed Arval Group’s results for 2020.
Increase of net income showing the strength of the business model
Despite the health crisis and thanks to the quality of its services, its ability to react quickly and seize new opportunities, the resilience of its business and the solidity of the BNP Paribas Group, Arval Group’s leased fleet grew by 6.4% compared to the end of 2019, reaching 1,381,555 vehicles (+7.3% on an average basis in 2020). The Corporate financed fleet reached one million vehicles in 2020 (+3.5%). The Retail segment grew by 15.7%, reaching 346,857 vehicles of which 100,000 on private lease. The Mid-term Rental segment grew by 6.0%, reaching 31,125 vehicles.
2020 saw the renewal or launch of partnerships forged with major partners, including SIXT (beginning with Germany, France, the Netherlands, UK and Belgium) and CaixaBank Payments & Consumer group in Spain and Portugal. A new cooperation agreement was also signed with Unicredit Bank Austria, strengthening Arval’s position in the country with the acquisition of UniCredit Leasing Fuhrparkmanagement GmbH. All of these partnerships are based on a strong focus to provide a digital customer experience and expand the range of products and services with shared, connected and electrified mobility solutions.
Driven by a sense of responsibility towards society and its customers, Arval developed in 2020 a strong CSR strategy to respond to environmental issues and was rewarded with the platinum EcoVadis rating, ranking Arval in the top 1% of its industry. In 2020, Arval assumed its role as an advocate for electric mobility and grew at twice the pace of the market in terms of Battery Electric Vehicle orders, taking into account the global market per country.
Gross operating income totalled 1,373.6 million euros, up by 3.5% compared to 2019. It was up by 5.8% at 1,436.2 million euros on a combined basis including the Greenval Insurance activity6, illustrating the good evolution of the activity despite the health crisis.
At 626.3 million euros, the lease contract margin rose by 4.4% compared to 20197. The lease service margin amounted to 588.6 million euros down by 1.6% due to lower net revenues on maintenance, tyres and assistance in connection with vehicles being less on the road in the context of Covid crisis. Including the Greenval Insurance activity, the lease service margin reached 651.3 million euros up by 3.5% thanks to the good evolution of the insurance activity benefiting from a lower level of damages due to less mileage in connection with health crisis. The car sales result increased by 23.3% compared to 2019, to reach 158.7 million euros in 20207 benefiting from the positive evolution of the used car market in terms of demand and prices after the lockdown period in the second half of the year.
At 735.0 million euros, the Arval Group’s operating expenses were up by 1.3% compared to 2019 (up by 1.3% at 739.6 million euros on a combined basis including Greenval Insurance). Considering the ratio Operating Expenses / Average financed fleet in unit, efficiency improved in 2020 as the ratio decreased by 5.9% to reach €550/unit8.
This contained increase of operating expenses thanks to saving measures implemented generated a positive jaw effect and an improvement of the Cost/Income ratio: 53.5% in 2020 compared to 54.7% in 2019 (51.5% in 2020 compared to 53.8% in 2019 including Greenval).
The cost of risk was up at 60.2 million euros (36.6 million euros in 2019)7. It was 30 basis points of financial outstanding9 (+10 bp compared to 2019) with a slight increase (+7 bp) in the cost of risk of the Corporate activity and an higher impact in the Retail activity (+15 bp).
The Arval Group’s operating result, at 578.4 million euros (565.0 million euros in 2019), increased thus by 2.4% (636.5 million euros up by 7.6% on a combined basis including Greenval Insurance).
Non-operating items totalled +1.5 million euros (-0.3 million euros in 2019). On a combined basis including Greenval Insurance, they stood at -2.8 million euros (+2.0 million euros in 2019).
Profit before tax, which came to 579.8 million euros (564.7 million euros in 2019), was thus up by 2.7%. On a combined basis including Greenval Insurance, it totalled 633.7 million euros (593.4 million euros in 2019) up by 6.8%.
Arval Group’s net income amounted to 471.4 million euros in 2020 (474.2 million euros in 2019), slightly down by 0.6%. Adding the results of the insurance activity made by Greenval, the combined Arval Group’s net income totalled 518.6 million euros up by 3.9% compared to 2019.
Arval Group’s net income attributable to equity holders was 459.9 million euros, down by 2.1% compared to 2019. Considering combined net income with Greenval, it reached 507.1 million euros, up by 2.5%.
The increase of net income reflects the strength of Arval business model despite health crisis thanks to its long-term rental business model and its customer, geographical and product diversification.
Total balance sheet grew by 7.5% to reach 26,454 million euros at the end of 2020 (up by 6.4% on a combined basis including Greenval Insurance) in relation with the growth of the Rental fleet (+8.2% compared to year-end December 2019). Total equity amounted to 2,072 million euro at December 2020 compared to 1,694 million euros at the end of 2019.
Expanding horizons in 2021 with the first year of Arval Beyond
Arval took an important step by presenting its new strategic plan Arval Beyond in October 2020, preparing the company to grow steadily in a new world, based on its main strengths while rethinking its business model to respond to customer needs.
Arval Beyond translates into four offers: mobility on top of cars with, for instance, the recent launch of bike leasing in eight countries (360° Mobility), technology for the benefit of Arval’s customers (Connected & Flexible), strong partnerships (Arval Inside) and sustainability at the core of everything (Good for you, Good for all).
In 2021, Arval will continue to deploy its strategy through concrete objectives. Amongst this year’s projects are:
- New services to better care for corporate needs: Arval Mobility Hub, Arval Mobility App, Arval Mobility Consulting, as part of the Arval Beyond’s 360° Mobility offer,
- A renewed ambition to double the Battery Electric Vehicles orders market, backed by a transformational CSR project to be launched in June 2021,
- An ambitious partnerships programme to reach new populations and frontiers.
In the coming years, Arval will accelerate its drive with the 2025 objective of becoming the leader in sustainable mobility, financing 2 million vehicles and generating 1 billion euros pre-tax net income with a 50% cost/income ratio. For 2025, Arval has set up also unparalleled CSR ambitions: half a million electrified vehicles leased and an average reduction of 30% in CO2 emissions for its entire fleet.
“Arval delivered in 2020 a solid net income of 519 million including Greenval, up 3.9% compared to 2019. The activity continued to show good growth despite Covid crisis resulting in gross operating income increase. Operating expenses were well contained which helped to compensate for cost of risk increase.
Arval showed in 2020 the strength of its business model thanks to its long term leasing business model and its product, country and customer diversification. Arval is even stronger today and is leading the market in terms of performance, pioneering spirit and its CSR commitments.
The crisis in 2020 confirmed the priorities we defined for Arval Beyond as something our customers needed. I would like to thank all the employees of Arval for their dedicated efforts to achieve this very good performance in 2020 and to deliver our ambitious targets for 2025”, says Alain van Groenendael, Arval Chairman and CEO.
The appendixes of this release (consolidated profit and loss account, combined profit and loss account, consolidated balance sheet) are available on the PDF version of this release.