Hitachi Capital UK has spun off its Amsterdam-based vendor finance branch into a subsidiary, as the pan-European company looks to hedge against Brexit’s threat to expansion on the continent.
In its latest full-year results, the company said the European Vendor Solutions branch, plans for which were first announced in September of last year, had now become “a separate business unit” as of April.
The division, dedicated to financing Hitachi and Mitsubishi products, intends to expand directly and through existing distributors in Europe, the Middle East and Africa.
Hitachi Capital first gained a European subsidiary with the acquisition of Hitachi Polska – formerly Corpo Flota – in 2014.
That business moved under direct control of Hitachi Corporation at the end of last year, leading its former parent to look to the Amsterdam unit to maintain a European subsidiary presence post-Brexit.
“[Brexit is] bringing with it uncertainty over its future trading relationships, Hitachi Capital UK chief executive Robert Gordon said. “Our branch in the Netherlands provides us with a base for further expansion into Europe.”
Hitachi Corporation chairman Hiroaki Nakanishi has repeatedly warned the Japanese conglomerate may end up shifting operations outside of the UK if the country becomes less business-friendly as a results of Brexit.
7.2% profit growth for Hitachi Capital, but mixed fortunes for divisions
Hitachi Capital saw its operating profit grow to £116.1m (€129.5m) in the year ending March, up 7.2%. Revenues were up 2.6% to £624.8m, while impairments shrank 9% to £16.6m.
The consumer finance business, operating in point-of-sale retail finance, was the main growth driver, offsetting mixed fortunes for the commercial customers divisions.
Business finance revenue growth, up 7.2% to £69.7, was in line with the wider company’s, with pre-tax profits also up 5% to £21.4m.
The division’s portfolio hit £1bn for the first time earlier this year, following the launch of a direct-to-market asset finance channel. Broker-introduced business accounted for 68% of the portfolio.
Gavin Wraith-Carter, managing director of the division, said: “We know that lending to businesses continues to be a challenge, however, manufacturing is in our DNA and our results demonstrate real trust from our business customers.
“Over the past year we have looked to offer a more diverse range of products to appeal to a wider customer base … to complement our existing relationships with brokers.”
In invoice finance, revenues were down 3% to £9.7m, with the division posting a loss of £2.1m, compared to £0.5m the previous year. The company said the division’s customer base had grown 18%, and it was looking to launch an automated financing process by the end of the 2018-2019 financial year.
In the vehicle finance segment, which includes commercial and consumer finance as well as personal loans, revenues declined slighly to £379.2m, while profits were down 20% to £22.1m.
Jon Lawes, managing director of the division, said: “The vehicle sector is going through a period of unprecedented change, with new technologies, environmental legislation and changes to vehicle tax making the role of fleet managers more complex.
“Understanding this changing landscape and focusing on the future needs of the market is essential, and over the past year, we have made significant investments in IT to ensure that we continue to deliver a market-leading customer experience.”