Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ayvens (ALLDF, Financial) achieved a strong underlying margin of 521 basis points in Q3 2024, aligning with their financial objectives.
- The company maintained a robust cost-income ratio of 63.4% in Q3 2024, indicating effective cost control measures.
- Used car sales remained profitable, with results per unit at EUR1,450, showing resilience despite market normalization.
- Ayvens (ALLDF) successfully migrated IT platforms in five countries, representing 26% of their fleet, enhancing operational efficiency.
- The company achieved EUR80 million in synergies year-to-date, on track to meet their full-year target of EUR120 million.
Negative Points
- Net income group share was negatively impacted by non-recurring items, resulting in EUR147 million for the quarter.
- The gross operating income decreased to EUR724 million in Q3 2024, down from EUR785 million in the previous quarter.
- Interest rate fluctuations negatively affected the mark-to-market valuation of derivatives, impacting financial results.
- The company faced challenges in maintaining service margins due to lower rental revenues and seasonal impacts.
- Ayvens (ALLDF) consciously reduced fleet size in less attractive markets like the UK and Turkey, impacting growth.
Q & A Highlights
Q: Can you highlight the reasons for the margin weakness and the way forward from here? Also, what are the risks regarding residual values, particularly in the BEV space?
A: The margin weakness was primarily due to a lower service margin in July, which has since improved. The used car market is holding up well, and we've taken significant actions on residual values for new BEVs. We are confident in our positioning and are utilizing cross-border sales to optimize prices. We expect stabilization and improvement in some markets. (Patrick Sommelet, CEO & CFO)
Q: Why has the contract repricing effort played out quickly despite long contract durations? Also, is there a shift in your approach to fleet growth?
A: The repricing was necessary due to inflation and interest rate changes. We are focusing on profitable growth and have consciously reduced our footprint in less attractive markets like the UK. We are stabilizing the order bank and plan to grow the fleet where margins are favorable. (Patrick Sommelet, CEO & CFO)
Q: Can you explain the difference between stable earning assets and the funded fleet decline? Also, how is competition affecting your used car sales results?
A: We have been cautious with fleet growth, focusing on margins. The market is becoming better educated about EV values, which helps us. We see stabilization in used car sales, driven by a short supply of ICE vehicles and a slow adaptation to EVs. (Patrick Sommelet, CEO & CFO)
Q: What is the potential impact of a French government penalty for not moving quickly enough to EVs?
A: We are against mandates that force a certain percentage of EVs. The impact would depend on whether penalties are directed at us or our corporate clients. We are in discussions with European authorities to ensure a balanced approach to electrification. (Patrick Sommelet, CEO & CFO)
Q: With interest rates falling faster than expected, how does this affect your margin guidance?
A: We are not changing our margin guidance. While lower interest rates are beneficial, we have been selective in passing these benefits to customers to maintain growth. We are also managing our fleet size strategically. (Patrick Sommelet, CEO & CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
