ALD | LeasePlan releases its strategic plan and financial
objectives to 2026
ALD | LeasePlan is releasing today its new “PowerUP 2026”
strategic plan.
At this occasion, Tim Albertsen, Chief Executive Officer, and
the management team will be presenting a detailed overview of ALD |
LeasePlan’s ambitions and main strategic operational and financial
objectives on 21 September 2023 in Paris.
“PowerUP 2026” strategic plan
The “PowerUP 2026” strategic plan follows the recent closing of
the LeasePlan acquisition on 22 May 2023, which established ALD |
LeasePlan’s leadership position in the mobility sector, well ahead
of the ambitions stated in the previous strategic plan, “Move
2025”.
ALD | LeasePlan now ranks #1 global multi-brand and
multi-channel car leasing player and #1 in 29 countries. Offering
the most valuable and innovative products to all client segments,
it operated a total fleet of 3.4 million1 fleet as at 30 June 2023,
twice the size of its nearest competitor. ALD | LeasePlan owns the
largest multi-brand Electric Vehicles (EVs) fleet in the world, at
428,000 vehicles, which reflects its leading role in the transition
to sustainable mobility.
The mobility sector benefits from strong and structural growth,
driven by long-term megatrends:
- Structural transition from ownership to usership is expected to
accelerate, lifting the European usership market from 4.9 million
vehicles in 2021 to 9.5 million vehicles in 2030, i.e. +7.7% CAGR
compared to 2021. All client segments are expected to grow, in
particular the consumer market2;
- Demand for electrification is also set to accelerate, with c.
70% of new passenger cars and light commercial vehicles expected to
be electric in Europe by 20303;
- Increasing digitalization, emerging ecosystems and evolving
competition are creating further growth opportunities.
Against this backdrop, the combination of its undisputed
leadership, powerful global operating platform and strong financial
profile, provides a unique position to ALD | LeasePlan to create
value in the mobility industry.
With “PowerUP 2026”, ALD | LeasePlan will leverage on the power
of leadership to shape the future of mobility and achieve
excellence, by executing a strategic plan articulated around 4
priorities: clients, operational efficiency, responsibility and
profitability.
ALD | LeasePlan plans to launch a new brand by the end of the
year, to create a powerful new identity from two highly reputed
industry players.
A one-stop shop with the broadest client reach, geographical
coverage and the largest distribution capabilities through more
than 430 partnerships, ALD | LeasePlan is best placed to answer
customers’ changing needs.
ALD | LeasePlan expects that its earning assets4 will grow
strongly by +6%5 CAGR between 2023 and 2026, driven by higher-value
vehicles (underpinned by the rising share of EVs6 in the funded
fleet) and selective growth strategy to meet the Group’s
profitability targets. Furthermore, the objective of reaching
200,000 active users of its MaaS7 platform, launched in 2022, by
2026, reflects its strong ambition to lead the transition to
sustainable mobility and go beyond electrification, into MaaS.
The efficient integration of LeasePlan is key in the success of
ALD | LeasePlan’s strategy. Conducted by the industry’s best
leadership team and people who share the same international culture
and performance mindset, the integration of LeasePlan is fully on
track.
The Group’s first objectives were reached according to plan,
allowing to confirm EUR 440 million annual run-rate synergies by
2026, evenly split between margin and procurement synergies on the
one hand and cost synergies on the other hand.
ALD | LeasePlan expects that a substantial share of procurement
synergies will stem from price and bonus improvement (c. 25% of
total procurement synergies from price and bonus improvement on
vehicles), while steering and cost control would also be strong
sources of procurement synergies.
With “PowerUP 2026”, ALD | LeasePlan will build the most
efficient scalable global operating platform and derive cost
synergies from efficiency improvements in the operating processes,
IT cost savings as well as direct spend savings, including on real
estate. As an illustration, IT cost per vehicle would be reduced by
c. 20%, while fleet / FTE8 ratio would improve by 15% in 2026
compared to 2022.
By 2026, ALD | LeasePlan will improve its Cost / Income ratio
(excluding Used Car Sales results) to best-in-class level of c.
52%, from 56%9 in 2022.
ESG and risk management are at the core of ALD | LeasePlan’s
strategy and drive every one of the Group’s actions.
ALD | LeasePlan will continue leading the way to sustainable
mobility by always advising its clients about the greenest way. As
a result, it targets EVs to attain 50% of new car registrations by
2026, a strong increase from 28% in 2022. By providing end-to-end
solutions, the Group makes it simple for clients to choose electric
and targets that 400,000 drivers will connect to its eMSP10 joint
venture with ChargePoint, to be launched by the end of 2023.
“PowerUP 2026” contains ambitious decarbonization objectives.
ALD | LeasePlan plans to sharply decrease the CO2 emissions of its
running fleet to less than 90g/km11 on average by 2026 vs. 112g in
2022 and to decrease its internal CO2 emissions12 by -35% in 2026
vs. 2019. ALD | LeasePlan’s people make the difference and
therefore the company targets to maintain a high employee
engagement rate of 75% in 2026.
Meanwhile, the Group will continue managing its risks
responsibly, to ensure a strong and resilient performance over the
long term. Its risk management lays on solid foundations, with a
robust governance framework, the leverage of its parent Societe
Generale’s best-in-class policies and resources, as well as
stronger risk management practices aligned with the Financial
Holding Company regulated status and supervision by the European
Central Bank.
ALD | LeasePlan has a strong framework in place to manage
residual value risk, its largest risk, throughout the asset’s life
cycle. Additionally, its global multi-channel remarketing platform
(600,000 vehicles sold p.a., access to a large range of buyers in
36 countries, of which 24,000 active traders) together with growing
multi-cycle lease capabilities are efficient operational risk
mitigants.
The combination of ALD and LeasePlan is highly synergetic. With
“PowerUP 2026”, ALD | LeasePlan targets to achieve 13% to 15%
Return on Tangible Equity13 (ROTE) by 2026, a level at the high end
of the financial sector. High capital generation will contribute to
a robust capital position, with target Core Equity Tier 1 (CET 1)
ratio at c. 12%. Furthermore, ALD | LeasePlan targets a dividend
payout ratio of 50%14 throughout the 2023-2026 period, thus
providing attractive returns to shareholders.
Financial targets to 2026
ALD | LeasePlan’s operating environment changed abruptly over
the recent years. The Group anticipates that inflation will remain
high in 2023 before it gradually normalizes in 2024. Interest rates
are expected to peak in 2023 and remain at a high level, leading to
modest GDP growth in Western Europe. After a couple of years of
disruptions in supply and logistic chains, new car production in
Europe would normalize starting 2024 towards 2026. The shift to
higher-value Electric Vehicles is expected to accelerate.
The Group applies the IFRS 3 “Business combinations” standard,
whereby a Purchase Price Allocation (PPA) exercise is conducted.
This exercise is currently ongoing. ALD | LeasePlan expects that
the identification and recognition at fair value of acquired assets
and liabilities will be completed by end 2023. Main items covered
comprise the valuation of:
- LeasePlan vehicles’ cash flows;
- Intangible assets relating to customer relationships.
Limited impacts are expected from this PPA exercise on the
opening balance sheet:
- Balance sheet: limited impact given the similarities between
ALD and LeasePlan’s approaches to vehicles valuation;
- CET 1 capital: limited impact from upfront gain related to UCS
depreciation curve alignment and intangible assets
recognition;
- Income statement: prudent UCS profit assumed for the purpose of
the PPA. For ALD in 2026, assumptions are at c. 20% of the 2023
anticipated level (before the impact of reduction in depreciation
costs).
ALD | LeasePlan’s financial objectives to 2026 reflect the
company’s ambition to grow its activity strongly throughout the
period, while substantially improving its operating efficiency to
best-in-class levels and maintaining robust solvency levels.
- Earning Assets CAGR of 6% between 2023 and 2026;
- Total annual pre-tax synergies confirmed at EUR 440 million by
2026, with progressive ramp-up: EUR 120 million by 2024, EUR 350
million by 2025, and the full amount of EUR 440 million by
2026;
- Total cumulated costs to achieve of EUR 525 million over
2022-2025. After EUR 128 million accounted for in 2022, ALD |
LeasePlan expects these costs to reach a peak in 2023 and 2024 (EUR
170 million and EUR 190 million respectively), before they go down
to EUR 37 million in 2025;
- Cost / income ratio (excluding Used Car Sales results) of c.
52% in 2026, from 56%15 in 2022. The improvement is explained
by:
- Margin increase (inflation on car prices and fleet growth): -9
percentage points;
- Synergies: -10 percentage points, only partially balanced
by
- Costs related to capital and liquidity optimization, regulatory
and funding: +5 percentage points;
- Inflation on overheads and cost of regulation: +10 percentage
points.
At c. 52% in 2026, ALD | LeasePlan’s Cost / Income positions as
best-in-class, allowing ALD | LeasePlan to decisively widen the gap
with competitors and reinforce its financial profile.
The deviation from the previous guidance of 47%, issued on 29
November 2022, is explained by higher inflation and LeasePlan IT
costs that are currently being reviewed as part of ALD |
LeasePlan’s global digital architecture definition;
- Return on Tangible Equity in the range of 13%-15% in 2026, at
the high end of the financial sector;
- Target CET1 ratio at 12% and Total Capital ratio at 16%;
- Dividend payout ratio at 50%.
Thanks to LeasePlan, the Group has access to a significant base
of deposits, amounting to EUR 11 billion as at 30 June 2023,
thereby strongly increasing the diversification of its funding
sources. Funding from parent Societe Generale, bonds and retail
deposits would each account for between 25% and 30% of total
funding, while securitization and commercial loans would represent
c. 10% each.
An established issuer on the market, ALD | LeasePlan has the
best credit ratings among multi-brand car leasing player: Moody’s
A1, Standard & Poor’s A- and Fitch A-. The Group expects to
issue annually EUR 4-5 billion bonds through ALD S.A., EUR 1-1.5
billion securitization while increasing its retail deposits base by
c. EUR 1 billion p.a.
On successful completion of “PowerUP 2026”, ALD | LeasePlan will
shape the future of mobility and address fast-growing markets from
a clear leadership position, combining undisputed industry
leadership, best position to capture growth and lead the transition
to sustainable mobility, best-in-class operating efficiency, robust
financial profile and strong track record of high profitability
through the cycle.
Further details around ALD | LeasePlan’s strategic targets will
be presented on 21 September 2023, when ALD | LeasePlan holds its
Capital Markets Day.
About ALD | LeasePlan’s Capital Markets Day
Date: 21 September 2023, at 14.00 Paris time (13.00 London
time)
Speakers:
- Tim Albertsen, CEO
- John Saffrett, Deputy CEO
- Berno Kleinherenbrink, Deputy CEO
- Patrick Sommelet, Deputy CEO and CFO
Webcast: https://edge.media-server.com/mmc/p/cx7n2y8w
Agenda
- 21 September 2023: Capital Markets Day
presentation
- 3 November 2023: Trading update and Q3
results
- 8 February 2024: Q4 and FY 2023 results
Press contact
ALD Automotive | LeasePlanStephanie
Jonville ALD Communication Department Tel.: +33 (0)6 46 14
81 90stephanie.jonville@aldautomotive.com
About
ALD | LeasePlan
ALD | LeasePlan is a leading global sustainable
mobility player providing full-service leasing, flexible
subscription services, fleet management services and multi-mobility
solutions to a client base of large corporates, SMEs, professionals
and private individuals. With the broadest coverage in 44 countries
through direct presence, ALD | LeasePlan is leveraging its unique
position to lead the way to net zero and further shape the digital
transformation of the industry through innovation and
technology-enabled services to enable the transformation towards
large scale adoption of sustainable mobility.
With 15,700 employees worldwide, ALD | LeasePlan manages 3.4
million vehicles (at end June 2023). ALD, whose majority
shareholder is Societe Generale, is the listed company on
Compartment A of Euronext Paris (ISIN: FR0013258662; Ticker:
ALD).
Disclaimer
This document contains forward-looking statements relating to
the targets and strategies of the ALD | LeasePlan Group. These
forward- looking statements are based on a series of assumptions,
both general and specific, in particular the application of
accounting principles and methods in accordance with IFRS
(International Financial Reporting Standards) as adopted in the
European Union, as well as the application of existing prudential
regulations. These forward-looking statements have also been
developed from scenarios based on a number of economic assumptions
in the context of a given competitive and regulatory environment.
These forward-looking statements are based on current beliefs and
expectations and are subject to significant risks and
uncertainties. Actual results and financial condition of the Group
may differ, possibly materially, from those set forth in the
forward-looking statements. The Group may be unable to: anticipate
all the risks, uncertainties or other factors likely to affect its
business and to appraise their potential consequences; and/or
evaluate the extent to which the occurrence of a risk or a
combination of risks could cause actual results to differ
materially from those provided in this document and the related
presentation. Therefore, although ALD | LeasePlan believes that
these statements are based on reasonable assumptions, these
forward-looking statements are subject to numerous risks and
uncertainties, in particular in the Covid-19 crisis and Ukraine war
context, including matters not yet known to it or its management or
not currently considered material, and there can be no assurance
that anticipated events will occur or that the objectives set out
will actually be achieved. Important factors that could cause
actual results to differ materially from the results anticipated in
the forward-looking statements include, among others, overall
trends in general economic activity and in ALD | LeasePlan’s
markets in particular, regulatory and prudential changes, and the
success of ALD | LeasePlan’s strategic, operating and financial
initiatives. More detailed information on the potential risks that
could affect ALD | LeasePlan’s financial results can be found in
the section “Risk Factors” in our Universal Registration Document
filed with the French Autorité des Marchés Financiers (which is
available on
https://www.aldautomotive.com/investor-relations/publications-and-documents/regulated-information).
Investors are advised to take into account factors of uncertainty
and risk likely to impact the operations of the Group when
considering the information contained in such forward-looking
statements. Other than as required by applicable law, ALD |
LeasePlan does not undertake any obligation to update or revise any
forward-looking information or statements. Unless otherwise
specified, the sources for the business rankings and market
positions are internal. This presentation includes information
pertaining to our markets and our competitive positions therein.
Such information is based on market data and our actual revenues in
those markets for the relevant periods. We obtained this market
information from various third-party sources (publications, surveys
and forecasts) and our own internal estimates. We have not
independently verified these third-party sources and cannot
guarantee their accuracy or completeness and our internal surveys
and estimates have not been verified by independent experts or
other independent sources.
1 Excluding entities held for sale
2 Source: CVA
3 Source: BCG, BofA, CVA and IEA
4 Net carrying amount of the rental fleet plus receivables on
finance leases
5 Based on current market assumptions
6 Electric Vehicles: Battery Electric Vehicles and Plug in
Hybrids
7 Mobility as a Service. Product currently known as “ALD
Move”
8 Full-time equivalent headcount
9 Combined entity, excluding Used Car Sales results, reduction
in depreciation costs, costs to achieve the integration of
LeasePlan and non-operating items
10electric Mobility Service Provider
11 WLTP (The Worldwide harmonized Light vehicles Test
Procedure)
12 Scope 1, Scope 2 and Scope 3 limited to business travel,
paper and waste
13 Net income, Group share after deduction of interest on AT1
capital / average tangible equity after dividend provision
14 Of net income, Group share, after deduction of interest on
AT1 capital
15 Cost / Income ratio of the combined entity in 2022, based on
public disclosure, excluding UCS results, reduction in depreciation
costs, costs to achieve the integration of
LeasePlan and non-recurring items
- 2023 09 18 - ALD CMD 2023 press release
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