De Lage Landen reports significant net profit despite tumultuous market
• 2008 net profit €235 million ($344 million)
• Lease portfolio up 13% to €23.3 billion ($32.4 billion)
• Risk Adjusted Return On Capital (RAROC) at 20%
• De Lage Landen wins Vendor Lessor of the Year Award
• Athlon Car Lease’s fleet surpassed the 200.000 mark
• De Lage Landen number 1 in customer satisfaction in the Netherlands
• Factoring unit reports 165% growth
De Lage Landen remains healthy
Karel Schellens, Chief Executive Officer, acknowledges that the situation that unfolded itself in 2008 is unprecedented: “In 2008 we’ve seen a financial crisis and recession coming together. A worst case scenario for us. But we’re still here. Better yet, we made a net profit of €235 million. Our portfolio grew by 13% to €23.3 billion. It’s safe to say we’re still a very healthy, trustworthy company with a bright future. We have taken adequate measures that will help warrant our future, a profitable future. More specifically, we have intensified our efforts in improving our infrastructure, our processes, our systems. We will invest in our member community and make sure they have all the tools and substance to achieve true customer connectivity and partnership. I am convinced that partnership is the cornerstone for success now and in the future, for our customers as well as for us.”
Core activities
De Lage Landen’s vendor finance business gained international recognition by the ‘Vendor Lessor of the Year Award’. In 2008 De Lage Landen opened its office in Portugal for both its vendor finance and car lease business. The company kick started its operations in the Central Eastern Europe Region via the acquisition of Siemens Leasing Kft. and Siemens Finance Zrt. in Hungary and finalized preparations for market entries in Chili and South Africa. The integration of Athlon Car Lease and Translease in the Netherlands was successfully concluded in 2008. Athlon Car Lease’s fleet surpassed the 200.000 mark. Its portfolio went up with 5% to €2.8 billion. Difficulties caused by the decreasing residual value of lease cars were in part mitigated by extending existing contracts. De Lage Landen’s on line label for consumer finance, Freo, saw an increase in the number of applications as well as in the number of conversions. This resulted in growth of Freo’s portfolio. De Lage Landen’s Factoring unit helps local Rabobanks support businesses that have a temporary or a structural need for additional working capital. Compared to 2007, the Factoring unit grew with 165%; the second consecutive year of significant growth.
Dutch home market
In its Dutch home market De Lage Landen focused heavily on combining the service offering of each of its units. This will result in a transition from being a transaction focused organization to a customer focused organization and an integral service offering towards customers. This has already paid off; De Lage Landen achieved the no. 1 rank in customer satisfaction according to InCompany.
Corporate Social Responsibility
De Lage Landen’s car lease entity, Athlon is known for its pursuit of ‘sustainable mobility’ and its aspiration to embed sustainability in its processes, products and services. This is evidenced by Athlon’s ‘Sustainable Mobility Program’. The starting point of this program is to prevent CO2 exhaust rather than to compensate for it. The program includes offering public transportation as an alternative to the lease car. De Lage Landen aims to have a positive impact on the world it operates in, both socially and environmentally, through its products and by the way it conducts its business. To help achieve this aim, the company appointed a Vice President Corporate Social Responsibility.
Outlook
De Lage Landen expects capital to remain scarce and volatile in terms of pricing all throughout 2009. The economic recession will negatively impact the residual value of lease cars. Moreover, the recession will add to the upward trend of risk costs. Combined, this will put heavy pressure on the company’s profitability. De Lage Landen has been reporting double digit growth figures for years on end. In 2009 however, the company does not expect its portfolio to exceed the single digit growth range. If there ever was a time in which partnership holds true, it is in 2009. De Lage Landen will balance its risk and financial management strategies with customer connectivity and partnership; standing by customers and helping them through difficult times. In addition De Lage Landen will invest in its infrastructure, processes and people. Enhancing the quality of its organization is key to a profitable future for De Lage Landen and its partners.
