|CONTINUED GOOD GROWTH OF THE ACTIVITY
LEASED FLEET: 1.6 million vehicles (+8.3%1 vs. 31/12/2021)
|STRONG GROWTH IN GROSS OPERATING INCOME, DRIVEN BY EXPANSION IN ACTIVITY AND THE GOOD EVOLUTION OF THE USED-CAR MARKET
GROSS OPERATING INCOME: 2,495.5 million (+43.7% vs. 2021)
|CONTROLLED OPERATING EXPENSES
STRONG IMPROVEMENT IN THE COST-INCOME RATIO
OPERATING EXPENSES: 874.3 million (+8.2% vs. 2021)
COST-INCOME: 35.0% vs. 46.5% in 2021
|LOW COST OF RISK
47.4 million euros (19 bp2)
|STRONG RISE OF NET INCOME
NET INCOME3: €1,249.2m (+73.4% vs. 2021)
VERY GOOD PERFORMANCE
The Board of Directors of Arval Service Lease met on 2 March 2023. The meeting was chaired by Alain van Groenendael, and the Board approved Arval Group’s results for 2022.
STRONG INCREASE OF NET INCOME DRIVEN BY CONTINUED EXPANSION IN ACTIVITY AND THE GOOD EVOLUTION OF THE USED-CAR MARKET
Despite challenging environment and auto sector, Arval continued to grow in 2022, maintaining the positive momentum of previous years. Arval outperformed the market in terms of leased fleet with 1,592,024 vehicles leased worldwide at the end of December 2022, meaning 8.3% growth (+5.5% at constant scope). It achieved this strong growth despite longer new-vehicle delivery times due to the semi-conductors shortage and logistics issues affecting the auto sector. The Corporate leased fleet reached 1,082,503 vehicles as at the end of December 2022 (+4.9% compared to end-December 2021). The Retail segment came to 454,186 vehicles, a 13.5% increase compared to end-December 2021, showing growing interest of SMEs and retail customers for full service leasing, even on a disturbed market. The Mid-term Rental segment expanded by 48% compared to 2021.
Arval continued to expand, acquiring in late November 2022 Terberg Business Lease Group (TBLG), a Dutch full service leasing services company specialised in full service leasing. This acquisition made Arval one of the largest mobility players on the Dutch market, with almost 500 employees and more than 100,000 leased vehicles, and diversified even more its offering dedicated to the retail segment.
In October 2022, Arval also finalised the transfer of part of the operational leasing activities of Banca Comerciala Romana (Erste Group). This allowed Arval to both strengthen its leadership in Romania, with 3,800 additional vehicles, and its partnership with Erste Bank in the region (Czech Republic and Slovakia).
At the half-way point of its Arval Beyond strategic plan, Arval achieved very good results for 2022. Throughout the year, it led its sector by launching innovative mobility solutions, by forming strategic partnerships, and by continuing its CSR efforts, in particular in supporting customers in their energy transition. In so doing, it continued to achieve major progress in each of Arval Beyond’s four offerings, thus making an active contribution to achieving BNP Paribas’ strategic ambitions in the field of mobility:
- Major partnerships were formed in 2022. The one established in February 2022 between BNP Paribas and Jaguar Land Rover provided very concrete evidence of how solid the Group’s integrated model is. The “One Bank Auto” approach derives greater value from the automotive expertise of several of its entities. Arval is playing a key role there, thanks to its know-how in full service leasing and fleet management. This integrated model brings to customers a response that is both harmonised and differentiating. In January 2022, Arval and Ridecell combined forces to accelerate the development of new, end-to-end mobility solutions for Arval customers.
- The transformation achieved in mobility solutions has paid off. Electric bike leasing is now up and running in 13 countries, and car sharing in 11 countries. Arval Mobility Hub has been set up as one of Arval’s offerings for companies wanting to offer their employees alternative mobility solutions, such as car sharing, bike sharing, leased bikes, electric scooters, etc. One such hub was set up at BNP Paribas Real Estate’s headquarter in France. Arval continues to roll out its Arval Mobility apps, which are now available in 10 countries.
- Arval’s flexible offers, designed to address its customers’ need for flexibility, are present in 24 countries. They expanded by 48% compared to 2021 to more than 55,000 cars. In March 2022, Arval consolidated its leadership in flexible mobility, launching Arval Adaptiv, an innovative and flexible car-subscription offer. And by late December 2022, Arval had rolled out Arval Re-lease, its used-car rental offering, in 16 countries, to address the shortage of new vehicles and the environmental necessity to extend vehicle service life. The Arval Re-lease fleet expanded by 60% compared to the previous year and has been successful, particularly in the Netherlands, Turkey, the UK, Poland and France.
- Arval’s connected fleet now has almost 450,000 vehicles (almost 30% of the fleet) in 22 countries, which is helping to enhance the quality of customer services, such as maintenance, insurance, recovery of stolen vehicles, etc. Moreover, to help customers better control their fleet costs and to accelerate their energy transition, in March 2022 Arval launched its Arval Connect offering. Arval Connect allows customers to optimise their TCO, to enhance their road safety and to have a more environmentally friendly fleet.
As part of its strategic Arval Beyond plan, Arval is working towards an ambitious goal of having 700.000 electrified vehicles4 in its fleet by the end of 2025, across all of its 29 countries. We expect half of that fleet to consist of Battery Electric Vehicles (BEV) by that time, assuming similar or better supporting measures from the governments, as well as charging infrastructure & supporting services being further upgraded.
At the end of 2022, Arval already crossed the threshold of 300.000 electrified vehicles in its fleet, 90.000 of which were BEVs. This represents a times four and a times eight respectively versus 2019, the year in which the Arval Beyond plan was initiated.
In 2022, Arval’s gross revenues rose by 6.1%, to 13,093 million euros (12,339 million euros in 2021), tracking its growth in business activity.
Gross operating income came to 2 495.5 million euros, up by 43.7% compared to 2021, due to the favourable trend in business activity and the good level of used-vehicle prices.
Gross operating income, excluding car sales results was stable. The lease contract margin rose by 1.4% compared to 2021 to 730.5 million euros, driven by growth in outstanding and financing of delivery times. The lease service margin decreased by 1.6% to 635.4 million euros, due mainly to inflation’s effect on the cost of services which book among other things the specific impact of an adjustment in projected margins on the existing fleet.
The car-sales result came to 1,129.6 million euros in 2022 (369.7 million euros in 2021). In the context of vehicle shortage, the average evolution in used vehicle prices was very favourable compared to 2021. This high level of used cars prices, observed in almost all countries, is linked to the evolution of supply and demand in connection with longer delivery times for new vehicles where the supply of used cars is impacted by fewer dehires from customers and where demand is sustained by a lower availability of new vehicles. As a result of longer delivery times for new vehicles and lower numbers of dehires, the number of vehicles sold decreased by 14.6% compared to 2021, to 255,147 vehicles.
At 874.3 million euros, Arval Group kept its operating expenses under control. They rose by 8.2% compared to 2021, driven by the expansion in activity, the ongoing implementation of the strategic plan and the effects of inflation. The cost-income ratio improved by 11.5 percentage points, to 35% in 2022 from 46.5% in 2021.
The cost of risk remained very moderate, at 47.4 million euros, or 19 basis points of financial outstandings5. It was very low at the same period of the previous year (34.2 million euros, or 15 basis points).
At 1,573.9 million euros (894.2 million euros in 2021), operating income thus rose by 76%.
Non-operating items totalled 88 million euros (16.5 million euros in 2021) including the positive impact of 80.4 million euros of the application, effective 1 January 2022, of the IAS 29 standard (“Financial Reporting in Hyperinflationary Economies” in Arval’s Turkish subsidiary (TEB Arval) and a very good performance of subsidiaries consolidated under the equity method (9.6 million euros).
Pre-tax profit thus rose by 82.5% to 1,661.9 million euros (910.6 million euros in 2021).
Net income increased by 73.4% to 1,249.2 million euros (720.5 million euros in 2021). Net income attributable to equity holders rose by 71.0% compared to 2021, to 1,195.1 million euros.
This very good performance, driven by currently high used-vehicle prices, reflects the strength of Arval’s full service leasing business model, and the diversification of its customer segments, its geographical footprint, and its products, despite the auto sector’s challenging environment and the effect of inflation.
The total balance sheet expanded to 36,917 million euros as at the end of December 2022 (an increase of 25.9% compared to the end of December 2021), driven mainly by growth in the rental fleet and financing of orders. Total equity expanded by 34% to 3,408 million euros at end-December 2022 (compared to 2,545 million euros at end-December 2021).
Challenges and goals for 2023
In the fourth quarter 2022, the BNP Paribas Group announced plans to position itself throughout the sector’s value chain to support its customers’ transition towards more sustainable mobility. With this in mind, Arval’s mission is to roll out solutions in vehicle fleets and sustainable mobility, while working even more closely with the Group’s other entities.
The mobility sector is expected to continue its transformation in 2023 in a changing environment. In this context, Arval can rely on its solid foundations, its agility, and the fact that it is part of the BNP Paribas Group. Its 2022 performances, highlighted by strong organic growth despite a challenging context, demonstrates its resilience and its resources.
In 2023, Arval will remain at its customers’ sides through:
- the effective operational start of the strategic partnership between Jaguar Land Rover and BNP Paribas to launch a suite of new mobility financing services across nine European markets. This partnership is the initial phase of a transformation plan designed to reimagine the role of financial services for Jaguar Land Rover customers;
- Element-Arval Global Alliance, which is now present in 53 countries, and has quadrupled the number of its shared customers in less than 10 years (4 million vehicles in all). The alliance’s in-depth expertise and the global scaling-up it provides offers true added value to Arval’s international customers, particularly on a consolidating market;
- ongoing development of strategic partnerships to guarantee end-to-end offers, including a cutting-edge car sharing platform with Ridecell;
- growth in connected services to help customers optimise the use of their fleets, to improve driver safety, and to accelerate the energy transition by developing a range of innovative and differentiating solutions;
- “The Journey Goes On” consulting services to continue assist customers in planning ahead and finding the most appropriate sustainable solutions in view of the current situation in the automotive sector;
And, since the start of January 2023, Arval has held 100% of Arval Relsa in Chile, Peru and Colombia after acquiring the 50% stake held by Inversiones Juan Yarur. This acquisition will allow Arval to step up the development of these three subsidiaries, which will be fully consolidated effective 1 January 2023 (previously consolidated under the equity method).
“Arval continued to develop its business well in 2022, with an 8.3% growth in its leased fleet compared to end-December 2021. Thanks to the resilience of its business model and its ability to offer new innovative solutions, Arval has continued to support its customers successfully.
Our gross operating income rose significantly, driven by high used-vehicle prices. We kept operating expenses under control, and our cost of risk is still low. Arval thus achieved net income of 1,249 million euros, a steep increase from the previous year.
Backed by the BNP Paribas Group’s solid strategic ambitions in the area of mobility, Arval intends to maintain its growth trajectory in 2023, while making even greater progress towards achieving the goals of its Arval Beyond 2025 strategic plan.
I would like to thank all Arval’s employees for this very good performance and for their commitment to achieving our ambitious 2025 targets”, said Alain van Groenendael, Arval Chairman and CEO.
1Growth rate at year end 2022 vs. year end 2021. Excluding acquisitions of TBLG and BCR’s operating lease activities in Romania, organic growth came to +5.5% at year end 2022 vs. year end 2021.
2Calculated on the basis of average financial outstanding, where financial outstanding (management data) represents the value of the rental fleet based on a financial amortisation
3Before net income attributable to minority interests
4Battery electric vehicles and hybrid vehicles
5Financial outstandings (management data) represents the value of the rental fleet based on a financial amortisation.