DLL, a global provider of asset-based financial solutions, reported interim results for the first half of 2022. Despite challenging market conditions, the company delivered portfolio and income growth during the first six months of the year, but net profits were heavily diluted by impairments attributable to the company’s holdings in Russia.
The company’s portfolio balance, when adjusted for currency movements, increased by more than 3% over the prior year’s interim results and totalled EUR 39.5 (USD 41.2) billion. New business volume was EUR 15.4 (USD 16.1) billion and reflected growth of 8% on a year-over-year basis. This resilient top line performance was achieved in the midst of challenging market conditions, including supply chain disruptions and product shortages which impacted equipment availability and delayed the activation of lease and finance contracts.
Higher impairments dilute interim net profit result
The company reported a net profit of EUR 101 (USD 110) million for the first six months of 2022, which represented a drop of 66% from the prior year. This result was heavily diluted by impairments that were taken on DLL’s portfolio in Russia and linked to the decision to cease all new business activities in Russia and manage the orderly rundown of the local business. Impairments for the first half of 2022 totalled EUR 209 (USD 228) million, with virtually all of these charges related to DLL’s business in Russia. This result equates to 110 bps and is significantly above DLL's long-term average of 44 bps.
Although impairments had an adverse effect on net profits, the underlying performance of the portfolio remained strong and continued to trend positively. The company reported net income of EUR 831 (USD 908) million, which represented almost 5% growth over the prior year when adjusted for currency movements. Operating costs were up by 9% on a year-over-year basis, as the company increased their workforce by 5% and made strategic investments to strengthen their operating and control environment and develop digital solutions to further enhance the customer experience and drive future efficiencies.
“Like many of our customers, DLL entered 2022 with cautious optimism as the world emerged from the COVID-19 pandemic.” commented Carlo van Kemenade, CEO and Chairman of the Executive Board. “And despite being confronted with many new geo-political and economic challenges in recent months, we have been able to support our customers, deliver solid results and invest in strengthening our foundation for future growth. I am very proud of the hard work and dedication exhibited by our global workforce during these unprecedented times.”