DJ ALD: reports full year 2020 results
ALD ALD: reports full year 2020 results 10-Feb-2021 / 07:30 CET/CEST Dissemination of a French Regulatory News, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. =---------------------------------------------------------------------------------------------------------------------- Press release Paris, 10 February 2021 ANNUAL FINANCIAL INFORMATION ALD reports full year 2020 results* - STRONG FINANCIAL PERFORMANCE ILLUSTRATING THE RESILIENCE OF THE BUSINESS MODEL IN A PANDEMIC CONTEXT - TOTAL CONTRACTS[1] STABLE - EXCELLENT PRODUCTIVITY OF REMARKETING OPERATIONS - RECORD VOLUME OF USED CAR SALES AT 305 THOUSAND UNITS, WITH
RESULT PER UNIT AT EUR 201, ABOVE GUIDANCE RANGE - DELIVERING ON OPERATING AND FINANCIAL GUIDANCE - SOLID NET INCOME (GROUP SHARE) OF EUR 509.8 MILLION, INCLUDING EUR 54 MILLION OF SPECIFIC PROVISIONS AND EXCESS
DEPRECIATION - PROPOSED 2020 DIVIDEND OF EUR 0.63 PER SHARE REPRESENTING A 50% PAYOUT RATIO
2020 Results highlights - Total Contracts1 1.76 million contracts managed worldwide at end Dec 2020 - Leasing Contract and Services Margins down EUR 40.0m, but up 1.5% vs. 2019 when restated for the impact of the
fleet revaluation process: EUR 39.0 million excess depreciation charge in 2020 vs. EUR 20.4 million release in 2019 - Used Car Sales Result at EUR 61.1 million - Operating Expenses down EUR 1.3m vs. 2019, bringing Cost/Income Ratio (excl. Used Car Sales Result) at 50.4%,
inside the 50% to 51% guidance range - Cost of Risk at 34 bps[2], including a EUR 15.4m forward-looking provision under IFRS9 - EUR 10.0 million after tax profit on disposal of stake in ALD Fortune (China) in Q1 2020 - Earnings per share[3] at EUR 1.26 - Proposed dividend of EUR 0.63 per share, corresponding to a payout ratio of 50% - ROE[4] at 12.5% vs. 14.8% in 2019 - Total Equity/Total Assets ratio at 16.7% vs. 15.7% in 2019
Main objectives of ALD's strategic plan 'Move 2025' - Total Contracts1 expected to reach c. 2.3 million by 2025, including bolt-on acquisitions - Leasing Contract & Services Margins, together, to increase at least in line with Total Contracts between 2019 and
2025 - Cost/Income (excl. Used Car Sales result) ratio to improve to between 46% and 48% by 2025 - Dividend pay-out ratio between 50% and 60% for 2020-2025 - - 40% on CO2 emissions[5] in 2025 vs 2019 - 30% of new car deliveries to be EV[6] by 2025
Outlook for 2021
The number of Total Contracts1 managed by ALD is expected to reach c. 2.3 million by 2025, including growth through bolt-on acquisitions. Private lease, ALD Flex and Used Car Lease in particular are expected to be strong drivers of ALD's funded fleet[7] growth, while growth in its 'unfunded' business will see a shift towards its mobility service offering, ALD Move, and greater selectivity in its Fleet Management business.
In view of the current uncertainty related to the pandemic, ALD is providing an outlook for 2021 that is explicitly linked to a central assumption about the operating environment during the year:
If the impact of the COVID-19 pandemic gradually fades in the course of the year and economic conditions improve thanks to strong macroeconomic policy stimulus by governments, ALD's core business, grouped together as Funded Fleet[8] is expected to renew with positive growth, after a lackluster 2020. At the same time, the number of Fleet Management contracts is expected to drop in 2021, following the non-renewal of the commercial relationship with one large partner (80 thousand contracts) on account of its low profitability. The launch and continued roll-out of ALD Move is expected to partly offset this loss in volume in 2021, at higher contractual margins.
Used Car Sales are expected to provide a positive contribution to Gross Operating Income with demand for used vehicles remaining strong, on the condition that strict lockdowns are avoided.
The Cost/Income ratio (excluding Used Car Sales result) is expected to resume its improving trend.
To summarise, for 2021 the Group expects: - Positive funded fleet8 growth - Positive Used Car Sales Result per unit - Improvement in Cost/Income ratio (excluding Used Car Sales result)
On 10 February 2021, Tim Albertsen, ALD CEO, commenting on the FY 2020 Group Results, stated:
"2020 has pushed companies and individuals out of their comfort zones. At ALD, we have quickly adapted our ways of working with customers and partners to launch new products and services. These learnings are extremely valuable. ALD has demonstrated the strength and resilience of its business model, underpinned by the agility and capacity for innovation of the organization and the teams. Our operating and financial performance in 2020 was strong despite inclusion of several provisions reflecting potential upcoming risks. Our remarketing tools have once again proven their efficiency and delivered a record performance. In the current context, ALD stays open to opportunities while paying careful attention to costs. Although 2021 continues to bring its lot of uncertainty, we are confident we are on the right track to deliver our Move 2025 strategic plan which positions ALD at the heart of the evolving mobility world and strengthens our competitive edge to become a fully integrated sustainable mobility provider and the global leader in our industry."
Resilient business model in a pandemic context
Growth in 2020 was penalised by severe lockdown measures taken in Western Europe. However, despite the adverse economic environment, Total Contracts remained virtually stable over 2020. This achievement illustrates the resilience of ALD's business model, underpinned by long-term customer and partner relationships. This crisis was the opportunity for ALD to show efficient support to long term corporate clients by reinforcing win-win relationships and designing tailor-made payment arrangements.
Over the year, the volume of cars sold reached a record level, illustrating the productivity of remarketing operations. Used car sales per unit landed at EUR 201 over the year, above the guidance range.
Proving its agility, in June 2020, ALD launched ALD Flex in 19 countries. This offer, particularly suited to the current uncertain environment, is now live in 25 countries.
As regards work organisation, flexible working arrangements are now fully operational and the ReadyToShapeTomorrow program was launched.
Total Contracts are down just 0.4% vs. end December 2019. Full Service leasing contracts reached 1,372 thousand units and Fleet management 386 thousand units. In the corporate client segment, while deliveries and order taking slowed down significantly in Q2 due to multiple lockdowns and mobility restrictions globally, Q3 saw a recovery and order take accelerated in Q4. Contract duration extensions were negotiated with some clients (from 3 to 12 months), thereby providing them with short term cashflow support. Aversion to public transportation triggered by pandemics generated further interest to provide employees with cars and e-bikes within multimodal packaged mobility solutions.
Despite difficult conditions in principal markets, the Private lease fleet grew over the year, to reach around 164 thousand contracts at end 2020.
With EU-mandated CO2 emissions targets coming into force, 2020 was a landmark year for green[9] powertrains. They represented 23% of ALD's passenger vehicles deliveries globally in 2020 vs. 13% in 2019, and 24% in the European Union + UK, Norway, Switzerland, well above the 20% target provided at the start of the year. The pandemic has accelerated the sustainability agenda for many corporates with strong demand for Electric Vehicles (EV)[10].
Rewarding ALD's CSR strategy, several top-ranked extra financial rating agencies have recognised ALD's strong commitment: - CDP has assigned ALD a B rating, above the Europe regional average of C and higher than the rental & leasing sector
average of C - Ecovadis, for the second year in a row, has given ALD a "Gold" rating at Group level, putting it in the top 3% of
assessed companies. - MSCI ESG ratings puts ALD in its top 3rd - Vigeo Eiris granted ALD with an Advanced level, within the top 3 in the Business Support Services category - Sustainalytics positioned ALD within the Top 8% in its global universe and Top 3% within Transportation - Gaïa Rating assessed ALD's performance at 79/100, 28 points above the average and within the top 15% - ALD is included in the FTSE4Good index.
Strong financial performance in line with guidance
Leasing contract and Services margins proved their resilience in 2020, growing 1.5% year on year when excluding for excess depreciation charge.
Leasing Contract Margin reached EUR 626.1 million in 2020, down EUR 37.9m vs. 2019. Leasing Contract margin evolution embeds a EUR 59.4m negative variation in excess depreciation between 2020 (EUR 39.0 million charge) and 2019 (EUR 20.4 million release) as a result of the fleet revaluation process.
Services Margin reached EUR 630.3 million in 2020, down EUR 2.0m vs. 2019. The Services margin benefits from lower accident and maintenance costs but is penalised by the decrease in volume discounts and lower excess mileage revenue.
In Q4 20 Leasing Contract Margin stood at EUR 178.9 million and Services Margin at EUR 151.5 million.
ALD's Gross Operating Income reached EUR 1,317.5 million in 2020, down 3.9% vs. the previous year, while rising by 9.0% in Q4 2020 to EUR 373.5 million vs. Q4 2019.
The contribution to Gross Operating Income from Used Car Sales result reached EUR 61.1 million in 2020, down from EUR 75.0 million in the previous year, but higher than expectations. In Q4 20 Used Car Sales result was EUR 43.1 million, vs. EUR 10.5 million in Q4 19.
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