Netherlands-based leasing and fleet management company LeasePlan has posted a 79% fall in net result for Q2 2019.
According to Leaseplan, the fall was related to an underlying performance impacted by quarterly cost increases of €14m (£13m) associated with increased investment in CarNext.com, and the strategic decision to stop development of the Core Leasing System in favor of a Next Generation Digital Architecture, leading to an impairment of €92m.
In other results released by the company, serviced fleet was up 2.8% year-on-year, underlying lease and additional services gross profit up 0.9%, and PLDV and end of contract fees gross profit was down 34.7% to €24m. CarNext.com’s B2C volumes were up 35% to 15,700 vehicles, and 23% runrate B2C sales penetration for the quarter. The number of delivery stores grew to 37 across 22 countries.
Tex Gunning, chief executive officer of LeasePlan, said: “This quarter saw solid growth in our Car-as-a-Service and CarNext.com businesses. Net result was impacted by the investment decisions we took in relation to our long-term growth initiatives in CarNext.com and the strategic restructuring of our IT architecture.
The Car-as-a-Service market is expected to grow substantially over the next 5-10 years driven by the mega trend from “car ownership to mobility as a service”. In order to be able to deliver these new mobility services to millions of customers, we need a business model that is entirely digital, meaning delivering digital services at digital cost levels and leveraging our rich data sources through AI technologies. This requires a digital architecture that is flexible, scalable and adaptable to new emerging digital platforms and digital technologies.
“Traditional process-oriented IT architectures are not fit for purpose in the digital world and therefore we have taken the strategic decision to stop the development of our Core Leasing System in favour of a more dynamic and modular Next Generation Digital Architecture. While leading to an impairment charge this quarter, this architecture will enable us in the future to offer a new range of smart fleet products and services to millions of customers with significant expected efficiency benefits.”
This month LeasePlan appointed a chief financial officer who will also sit as a member of the board. Jochen Sutor joins LeasePlan from Commerzbank, where he served the last six years as global head of finance.