EQS-News: Eleving Group S.A.
/ Key word(s): Annual Results
Operational and Strategic Highlights
Financial Highlights and Progress
Modestas Sudnius, the CEO of Eleving Group, comments:
“Entering this year, it was clear that high inflation rates and the growing cost of borrowing would challenge overall client payment behavior. Also, Eleving Group had a significant debt of its own, which had to be managed in the best possible way. And finally, we had a goal to increase our efficiency and profitability as an organization further.
Looking back, I can tell that we had very ambitious goals, and I am even more delighted to conclude that we managed to achieve most of them and even more. We were able to have a stable year with increasing portfolio quality; on top of that, in the second part of the year, we laid the foundation for further growth in 2024 - through the integration of consumer finance businesses in the South African region, by capturing new possibilities in our existing markets and securing future financing by issuing new EUR 50 mln bonds.
Despite the uncertainty in the global economy, demand for consumer credit products has not weakened, and people's ability to pay is still higher than expected in a period of rising interest rates and inflation. In the vehicle financing segment, after a slightly slower start early in 2023, we recovered the dynamics in the second half. This mixed trend was, however, to be expected, as people temporarily postponed large purchases. In the meantime, the unsecured consumer finance business grew steadily throughout the year, benefiting from weakening competition and utilizing previously established business essentials – a vast sales network through online and offline channels and well-calibrated customer scoring models.
We have successfully addressed the diversification of our funding structure by unlocking numerous additional financing channels like local impact funds, bank loans, local notes, and, of course, the latest bond issue that attracted EUR 50 mln and improved our debt maturity profile. Also, we continue to maintain lean operations and strong cost discipline. Together with the increasing digitization of our daily processes, we have managed to maintain a very cost-effective business even in an inflationary environment.
In recent years, our mindset has been more focused on organic expansion in our core business lines. However, the integration of ExpressCredit business will allow us to expand while still maintaining strong position in other existing markets. We are open to exploring further growth opportunities through new market launches or acquisitions. However, it will not be growth at the cost of profit, and this would become a priority in case of additional equity injection in the business. We will continue actively participating in the capital markets and exploring all the opportunities these avenues offer. Having a well-diversified debt stack in place with no significant maturities upcoming in 2024, our focus will be on potential equity raising, exploring opportunities both in Baltic markets and outside it, not ruling out IPO as one of the routes.
In the meantime, the Group strengthened its position in green mobility by rapidly expanding the electric car-sharing service in Latvia and electric motorcycle financing service in Kenya. Our customers commuted over 3.2 million kilometers on pure electricity, thus reducing over 300tCO2 compared to what traditional vehicles would have produced. This year, more than in other years, we see that people paid much more attention to the so-called value for money criteria. This translated into more sustainable decisions, i.e., a greater demand for green mobility solutions that are more climate-friendly and economical in the medium to long term. This trend will likely continue next year, so we expect good results from our sustainable mobility products.”
Māris Kreics, the CFO of Eleving Group, comments:
“Despite the challenging year of peak interest rates and inflation, Eleving Group achieved strong results in all key financial indicators. The Group’s adjusted EBITDA increased to EUR 77.2 mln, or by over 21%, compared to 2022, while the total revenue, including fee and commission income, reached EUR 191.1 mln, showing an increase of close to 9%. The adjusted net profit before FX landed at EUR 29.8 mln, up by 35%, while the net portfolio reached EUR 320.2 mln.
It was a year in which we made a solid effort to increase our efficiency and improve our cost of risk. Compared to last year, the Group also achieved higher relative profitability, allowing it to absorb any foreign currency exchange rate fluctuations successfully. With local funding and hedging solutions in place, Eleving Group is expected to have a limited negative impact on foreign currency exchange rates in the coming years. We also strengthened the Group’s capitalization ratio while maintaining sustainable dividend payout levels.
During 2023, we continued to diversify our funding structure by raising USD 7 mln from the Verdant Capital Hybrid Fund for the Kenyan portfolio growth. In addition, we successfully continued our Kenyan note program, through which we raised more than EUR 13 mln for business development. Furthermore, in 2023, we established the cooperation with ACP Credit, Central Europe's leading provider of financing solutions for middle-market businesses. As a result, in early 2024, Mogo Romania received an investment of EUR 10 mln, making it the first time in the Group's history that a significant external funding partner outside the Mintos marketplace was brought to Mogo Romania. In addition, we continued to develop our electric car-sharing service, OX Drive, by raising EUR 2.8 million from Industra Bank to expand its car fleet.
Of course, one of the highlights of the year was the issuance of the latest Eurobond and subsequent listing on the Baltic and Frankfurt stock exchanges, resulting in EUR 50 mln raised and over 2,000 new investors onboarded. The bond issue was mainly tailored towards the existing investors (both retail and professional ones) from the Baltic states. In terms of volume, this was one of the largest corporate issuances in the Baltics in recent years. Retail investors from Estonia were particularly active. Therefore, we can assume that companies with a strong track record and a healthy balance sheet still have support from local retail investors even in volatile market conditions characterized by an ambiguous investment landscape.
Furthermore, I would like to note that Fitch Ratings affirmed Eleving Group's long-term Issuer Default Rating (IDR) and Senior Secured Debt Rating (SDRR) at 'B-,' with a stable outlook. Despite the global economic challenges, we have maintained this performance for the fourth consecutive year.
In conclusion, it was a successful year for the company, with healthy growth, sound decisions that delivered expected results, and a strong financial position that will contribute to the future sustainable development of our global business.”
Full unaudited consolidated report on the 12M period ended on 31 December: https://eleving.com/investors/
A conference call in English with the Group's management team to discuss the results is scheduled for 14 February 2024 at 15:00 CET.
Link to register for a conference call can be found here.
Edgars Rauza, Eleving Group Investor Relations Manager
About Eleving Group
Eleving Group comprises a number of financial technology companies with a global presence. The Group operates in the vehicle and consumer finance segments on three continents, providing financial inclusion and disruptively changing financial services industries in its countries of operation. Founded in 2012 in Latvia, the Group has revolutionized how people purchase cars. Having expanded across the Baltics within its first year in business, the Group continued expanding in the following years, servicing 16 active markets. With its headquarters in Latvia, the Group operates in the Baltics, Central, Eastern, and South-Eastern Europe, Caucasus, Central Asia, Sub-Saharan and Eastern Africa. For two consecutive years since 2020, the Group has appeared on the Financial Times list of Europe’s 1000 fastest-growing companies.
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|Eleving Group S.A.
|8-10 avenue de la Gare
|Regulated Unofficial Market in Dusseldorf, Frankfurt, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; SIX
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|EQS News Service
1834779 12.02.2024 CET/CEST