|CONTINUED GOOD GROWTH OF THE ACTIVITY
MILESTONE OF 1.5 MILLION VEHICLES EXCEEDED
LEASED FLEET: +5.9% vs. 30/06/2021
STRONG INCREASE IN GROSS OPERATING INCOME DRIVEN BY THE EXPANSION
|CONTROLLED OPERATING EXPENSES
STRONG IMPROVEMENT OF COST INCOME RATIO
OPERATING EXPENSES: +7.9% vs. H1 2021
COST INCOME: 34.9% vs 46.7% in H1 2021
|COST OF RISK AT A MODERATE LEVEL
|STRONG RISE OF NET INCOME
NET INCOME2 : €625.5m (+86.9% vs. H1 2021)
|STRONG OVERALL PERFORMANCE
CONTINUED GOOD BUSINESS GROWTH & SHARP RISE OF NET INCOME
The Board of Directors of Arval Service Lease met on 9 September 2022. The meeting was chaired by Alain van Groenendael and the Board approved Arval Group’s results for the first half of 2022.
STRONG RISE OF NET INCOME DRIVEN BY THE CONTINUED EXPANSION OF THE ACTIVITY AND THE POSITIVE EVOLUTION OF THE USED CAR MARKET
Arval’s activity continued to develop well in the first half of 2022 thanks to the quality of its services and the strength of its business model: the leased fleet grew by 5.9% compared to the end of June 2021 reaching 1,500,536 vehicles despite longer delivery time for new cars in connection with the shortage of semi-conductors and a challenging overall context in the automotive sector. It confirmed Arval’s position as the European leader in full service multi-brand leasing. The Corporate leased fleet reached 1,033,046 vehicles at the end of June 2022 (+2.0% compared to the end of June 2021). The Retail segment grew by 13.3% compared to the end of June 2021, reaching 421,739 vehicles of which 140.337 on private lease (+20.3% compared to the end of June 2021). The Mid-term Rental segment grew by 45.0% compared to the first half of 2021 reaching 45,091 vehicles, fostered by the longer delivery time for Long-term Rental.
Arval continues its growth and announced the 8 September 2022 the acquisition of a full service leasing company in the Netherlands, Terberg Business Lease Group (TBLG)3, with a total fleet of 38,000 vehicles. This acquisition will allow Arval to strengthen its position in the Netherlands becoming one of the main players locally and to enter the B2C market in this country where TBLG enjoys a strong position with its well-known brand JustLease.
Arval also announced in May the signing of an agreement with Banca Comerciala Romana (Erste Group) for the transfer to Arval of part of its long-term leasing business in Romania (3,500 vehicles)4. The transaction includes a cooperation agreement for the distribution of operating lease contracts and mobility solutions to Banca Comerciala Romana clients.
Throughout the first half of 2022, the company continued to put the Arval Beyond strategic plan into action in line with Arval’s ambition to become a leader in sustainable mobility. Progress has been made on each of the four Arval Beyond offers:
- The transformation related to mobility solutions (360° Mobility) continued to bear fruit: E-bike leasing is operational in 13 countries and the number of bike-leasing contracts grew by 17% compared to the end of December 2021, the number of MaaS5 users increased by 2.2 times compared to the end of December 2021 and the number of rented months with Mid Term Rental rose by 63% compared to the first half of 2021 with strong utilization rate.
- Regarding connected cars (Connected & Flexible), Arval launched “Arval Connect” a powerful solution to help customers better control their fleet costs and accelerate energy transition. Arval Connect is currently deployed in 22 countries.
- Arval’s partnerships (Arval Inside) continued to develop in the automotive sector with the strategic partnership signed in February 2022 by BNP Paribas with Jaguar Land Rover Automotive for mobility financing solutions in nine European countries in which Arval will contribute its expertise in car leasing and with the expansion to France of the partnership with MG after Italy and Germany. In addition, Arval signed a new strategic partnership in Italy with BCC Iccrea Group (Italy largest cooperative banking group) giving rise to creation of the Rentup white label - an indirect sales channel offering Arval's long and medium term rental products through B2B and B2C channels.
- Arval continued to support its customers in their energy transition (Good for you, good for all) with electrified vehicles6 representing 30% of deliveries worldwide. At the end of June 2022, Arval Group’s leased fleet comprised 244,520 electrified vehicles, up by 58.4% compared to the end of June 2021.
In the first half of 2022, Arval continued to develop its offer for used vehicle leasing services, “Arval Re-Lease”, with a financed fleet of 5,461 vehicles at the end of June 2022, up by 30.9% compared to the end of December 2021.
Gross operating income totalled 1,219.5 million euros, up by 44.2% compared to the first half of 2021, illustrating the good development of the activity and the positive evolution of the used car market.
Supported by the growth of the leased fleet, gross operating income excluding car sales results increased overall by 6.7%: at 378.8 million euros, the lease contract margin rose by 5.6% compared to the first half of 2021 and the lease service margin amounted to 346.6 million euros, up by 8.0% compared to the first half of 2021.
The car sales result reached 494.1 million euros in the first half of 2022 (166.0 million euros in the first half of 2021). The number of disposals decreased by 22.6% (132.350 vehicles) compared to the first half of 2021 in connection with longer delivery time for new cars which delays the dehires on the existing fleet. However, the car sales result benefited from the positive evolution of the used car market in terms of demand and prices. 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.
At 425.8 million euros, Arval Group’s operating expenses were controlled: they were up by 7.9% compared to the first half of 2021 in relation to the growth of the activity and to inflation impact. The Cost/Income ratio improved: 34.9% in the first half of 2022 compared to 46.7% in the first half of 2021.
The cost of risk remained moderate, at 26.2 million euros or 21 basis points7 of financial outstanding8. It was at a very low level during the same period last year, at 15.7 million euros (14 basis points).
The Arval Group’s operating result, at 767.5 million euros (435.1 million euros for the first half of 2021), thus increased by 76.4%.
Non-operating items totalled +69.1 million euros (+6.6 million euros for the first half of 2021) and included a positive effect of 62 million euro due the implementation of IAS 299 effective 1 January 2022 in the Arval Turkish subsidiary (TEB Arval).
Profit before tax, which came to 836.6 million euros (441.7 million euros for the first half of 2021), was thus up by 89.4%.
Arval Group’s net income amounted to 625.5 million euros for the first half of 2022 (334.6 million euros for the first half of 2021), up by 86.9%10.
Arval Group’s net income attributable to equity holders was 590.1 million euros, up by 81.6% compared to the first half of 2021.
This strong performance supported by the current high level of used car prices reflects, despite the overall challenging context in the automotive sector and the rising inflation context, the strength of the Arval long-term rental business model and its customer, geographical and product diversification.
The total balance sheet grew by 10.3% compared to the end of 2021 to reach 32,340 million euros at the end of June 2022, in relation to the growth of the activity. Total equity amounted to 2,811 million euros at the end of June 2022 compared to 2,545 million euros at the end of 2021.
“Arval delivered a very strong performance in the first half of 2022. Its activity continued to develop well with our leased fleet up by 5.9% compared to 30 June 2021, crossing the 1.5 million leased vehicles milestone. Supported by the high level of used car prices, this resulted in a very strong increase in our gross operating income.
Operating expenses were controlled and cost of risk remained moderate. Thus, in the first half of the year, Arval reported a net income of 625 million, sharply up compared to the same period last year.
We continued to implement in the first semester our 2025 plan Arval Beyond with significant progress in all its dimensions.
I would like to thank all Arval employees for their dedicated efforts in achieving this very good performance”, says Alain van Groenendael, Arval Chairman and CEO.
1 Calculated on average Financial Outstanding where financial outstanding (management data) represents the value of the rental fleet based on a financial amortisation, annualised bp
2 Before net income attributable to minority interests
3 Subject to customary regulatory authorizations. Closing expected by 30 June 2023.
4 Subject to customers’ approval. Signing on 31 May 2022, with closing expected by the end of 2022
5 Mobility Arval as a Service : a single application for all your journeys
6 Battery electric vehicles and hybrid vehicles
7 In annualised bp
8 Financial outstanding (management data) represents the value of the rental fleet based on a financial amortisation
9 “Financial Reporting in Hyperinflationary Economies”
10 Including +47 million euros impact of the application of IAS 29 (+6.3 million euros in the Gross Operating Income, +0.6 million euros in the Operating expenses, +62 million euros in the non-operating items and +21 Million euros in the deferred tax).