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May 21, 2021updated 22 May 2021 10:02am

Grenke’s year of Covid and short-seller blew €45m hole in net profit

By Alejandro Gonzalez

Grenke AG, a German-based global provider of leasing to SMEs, reported that a thorough audit of its 2020 finances “confirms value” in the company, yet losses in its share price and net profit cast a shadow over its growth agenda.

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Grenke AG has outlined its profit and loss as part of its published annual report for the year ending 31 December 2020.

The company presented preliminary figures on 30 April 2021 followed by an announcement on 17 May 2021 that the auditing firm KPMG had issued an unqualified audit opinion for the annual and consolidated financial statements as of 31 December 2020.

Antje Leminsky, chair of the board of directors of Grenke AG, said: “We have successfully concluded an exceptionally difficult 2020.

“Not only did we withstand the strong headwinds from various directions, but now the prerequisites are in place to allow Grenke to return to its growth mode,” she added.

Grenke AG reported a net profit of €88.4m for 2020 (2019: €133.3m), which it said met its forecast of consolidated net profit in the upper double-digit millions published on 26 February 2021. Nevertheless, the year-on-year difference, at €44.9m, represents a 34% decline in Grenke’s net profit for 2019.

For the 2021 financial year, Grenke is forecasting a net profit of €50m to €70m, this would represent a 20% to 43% decline on the year 2020.

The board of directors and supervisory board propose a dividend payment for the 2020 financial year of €0.26 per share (previous year: €0.80). “This level enables Grenke AG to conserve its capital base and the flexibility to take advantage of future growth opportunities,” Grenke said.

Shares in Grenke fell sharply in September 2020 after London-based short-seller Fraser Perring (Viceroy Research) raised several accusations against Grenke. The group’s share price tumbled in 2020, from a high of approximately €70 a share in August 2020 to a low €26 in September 2020.

Grenke’s share price currently stands at €38 a share.

In the wake of the Viceroy allegations, Wolfgang Grenke, the founder of the company, whose family has a minority interest in Grenke, was “suspended” as deputy chairman of the supervisory board while the allegations were investigated.

In February 2021, an independent audit by Mazars, under the auspices of the German financial regulator, said it found flawed accounting of Grenke’s franchise arrangements. The BaFin report also found that Grenke Bank made €37m in problematic loans to SMEs which raised questions about risk management at Grenke AG.

Grenke said it took on board the criticisms and that it would make changes to its franchise agreements.

In its annual report, Grenke said: “The extremely thorough audit of the financial statements by KPMG confirmed the value of Grenke’s business.”

The company’s equity ratio (which shows how much a company’s financing comes from debt or equity) was 16.3 per cent, “above the company’s self-imposed minimum target of 16 per cent,” Grenke said.

Sebastian Hirsch, chief financial officer of Grenke AG, said: “The audited consolidated financial statements prove beyond a doubt the value and sustainability of our business. We are aware that we can and must improve in some areas, but we have successfully mastered an audit marathon and have already increased our level of transparency significantly.

“This gives us a good starting point for expanding our leading position as a provider of small-ticket leasing and as a partner for SMEs worldwide.”

On 31 May 2021, Grenke will report its business performance for the first quarter of 2021.

Grenke has started the routine tender process for the appointment of the auditor for the financial year 2021. The result of this tender will be announced with the invitation to the ordinary annual general meeting, which will be held remotely on 29 July 2021.

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Navigate your business through the ‘new normal’

COVID-19 continues to dominate headlines the world over. It has already affected our lives forever. The way we work, shop, eat, seek medical advice, and socialize will all be different in the future. Quite how different remains to be seen, but all industries must plan for multiple eventualities.  Faced with an explosion of conflicting information on how to plan and implement successful recovery strategies, decision-makers are in dire need of a single, reliable source of intelligence.   GlobalData’s COVID-19 Executive Briefing gives you access to unparalleled data and insights to successfully navigate the uncertain road to recovery across the world’s largest industries. Understand every aspect of this disruptive theme by delving into: 
  •  COVID-19 infection update, with statistics on the spread, testing by country, as well as the latest data on vaccines and therapeutic developments 
  • Economic impact overview, covering stock market indices, GDP, unemployment rates, policy responses & GlobalData’s economic recovery scorecards 
  • Sector developments, with access to sector insight summaries, cross-sector indices and the leaders and laggards in each industry vertical 
Whatever your company’s imminent strategic plans, the long-lasting impact of COVID-19 must not be overlooked. Find out how to futureproof your business operations – download our report today. 
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