LeasePlan has announced Q3 2018 results, which saw net profits fall as a result of the crash in the Turkish lira.

The service fleet increased 6.8% to 1.8m vehicles

The figures show the net result was down 48% to €67m from €129m for Q3 2017; the result of a post-tax impairment of €73m (€84m pre-tax) on the Turkish fleet as the lira crashed compared to the euro, while for the first nine months of the year, net result fell 12.6% to €353m (€404m for the same period in 2017).

The leasing firm said Turkey was the only country in which it had meaningful transactional foreign exchange exposure, specifically on the resale value of its vehicles.

Until recently, local market convention had been to price lease contracts in euro, whereas vehicles at contract-end are sold in lira. The exceptional period of economic and political volatility in Turkey in the summer of 2018 and the resulting overall depreciation of the lira has led to decreasing prices of used cars in euro terms. The €84m pre-tax

impairment represents the lower residual value in euro expected for current euro denominated contracts on LeasePlan’s fleet in Turkey.

LeasePlan added that it had implemented ongoing mitigating actions, such as lease extensions, used Car-as-a-Service offerings, and pricing new business in Turkish lira to mitigate further transactional currency exposure.

Excluding the impairment, the underlying net result was up 6.0% to €147m for Q3 while the serviced fleet for the first nine months of the year was up 6.8% to 1.8 million vehicles.

Growth in revenues was up 2.9% in Q3 to €2.39bn. Lease & Additional Services income in Q3 grew 0.9% to €1.64bn or 1.6% on a constant currency basis due to growth in the fleet and increased uptake of services. Vehicle Sales and End-of-Contract Fees were up 7.6% to €751m.

Within the ‘Car-as-a-Service’ leasing and additional services division, gross profit was up 8.8% (excluding the impairment).

LeasePlan – which cancelled its planned IPO a month ago due to “market conditions” – also reported a 75% increase in B2C car volumes in its CarNext.com online used car marketplace with 25% run-rate B2C sales penetration and 160% growth in Used Car-as-a-Service (UCaaS) to 2,100 cars.

Tex Gunning, CEO of LeasePlan, said: “LeasePlan has delivered another quarter of strong growth across both of our businesses as we continue to lead the megatrend from ownership to subscription in the Car-as-a-Service markets for both new and used cars.

“In our Car-as-a-Service business for new cars, which operates under the LeasePlan brand, our serviced fleet was up 6.8% to 1.8 million vehicles. During the quarter, we also signed an exclusive memorandum of understanding with SAIC – China’s largest vehicle manufacturer – to bring the first full electric light commercial vehicle in its category to continental Europe, accelerating the shift to zero-emission mobility among commercial drivers. This partnership shows how a major global OEM entering Europe has chosen our Car-as-a-Service model rather than traditional retail dealer models to deliver their cars and puts LeasePlan at the core of this evolution.

“CarNext.com, our disruptive, digital, used-car marketplace, has continued to grow rapidly and is now present in 18 countries through an integrated online platform and 28 Delivery Stores. B2C volumes increased 75% in the quarter, while our innovative Used-Car-as-a-Service proposition grew 160% to 2,100 newly contracted cars in Q3.

“Our overall results were impacted by the exceptional depreciation of the lira in Turkey, the only country where LeasePlan has meaningful transactional currency exposure. We have taken clear actions in Turkey to mitigate exposure to currency volatility for new business.”