Latvia’s Eleving Group Reports Net Portfolio of €295M in Q2 2023

Eleving Group has announced unaudited results for the first half of 2023.

The company has provided the following operational and financial information:

Eleving Group reveals that it “recorded €90.6M in revenues in Q2 2023. Lease and subscription-based products contributed to €25.2M of the revenue, up 7.2%, compared to the last six months of 2022.”

This was reportedly “driven by lending in the motorcycle-taxi segment in East Africa and a scale-up of rental and subscription-based products in the Baltics.”

Traditional lease and leaseback products “contributed €34M to Q2 2023 revenues, up 7.9% compared to the respective period in 2022.” This revenue growth was mainly attributable “to portfolio growth in Romania; however, nearly all of the company’s other markets experienced positive incremental growth.”

Revenues from the consumer loan segment “contributed €27.6M to the half-year revenue, down 11% compared to the last six months of 2022.” The 11% drop exclusively stemmed from the run-down of the Ukrainian portfolio, “as the revenues of all other consumer finance markets increased during the corresponding timespan.”

Eleving Group’s earnings “before interest, taxes, depreciation, and amortization (EBITDA) in the respective period reached €36.1M, compared to €30.7M a year ago, while the adjusted net profit before FX amounted to €13.6M, an increase of €4.6M compared to the first six months of 2022.”

The Baltic business, “excluding Primero operations, represents 18.5% of Eleving Group’s total net portfolio.” In terms of volume, the Lithuanian portfolio accounts “for the largest share of the Baltic countries at €30.3M, followed by the Latvian portfolio of €12.9M, and the Estonian portfolio with €11.3M.”

As noted by the firm’s management:

“The results highlight that Eleving Group has delivered on its promises to its stakeholders and executed its strategy well, recording high efficiency and profitability ratios in the first 6 months of 2023. Over the last 12 months, the company took a more conservative approach and focused on underwriting, portfolio quality, and ensuring that the company is lean and efficient. As a result, the Group sustained a steady net loan portfolio while its key performance and efficiency indicators kept improving.”

Modestas Sudnius, CEO of Eleving Group​, added:

“In the first half of 2023, we observed that customers faced inflation-related difficulties in our EU and African markets. That had an effect on the overall payment discipline. However, this trend did not significantly impact the portfolio quality since, in the previous 12 months, the company’s core focus was on a stricter underwriting policy, higher customer down payments, and further improvement of debt collection tools. That, despite economic turbulences, allowed the company to decrease impairment costs compared to last year. We are committed to maintaining our strategic direction unchanged, which, together with slightly increased pricing to address the changes in the cost of borrowing, should deliver strong results in the following quarters, even in more challenging economic conditions.”

In early July, Eleving Group announced “that it had obtained EC Finance Group by integrating and combining both companies’ equity amounts. EC Finance Group, better known as ExpressCredit, is a consumer finance provider operating in four Sub-Saharan countries.”

As a result of the transaction, Eleving Group will “take over the company’s assets, subsidiaries, and client portfolio and increase EC Finance Group’s equity.”

The firm’s management shared:

“During Q2, the execution of the Group’s fundraising strategy and the plans for the global capital markets in the coming months were also very much in focus. We are actively working with our partners to frame a new bond product aimed to be launched in the second half of the year. At the same time, we are continuing the work on country-level local bond issuances and other funding sources.”

Maris Kreics, CFO of Eleving Group, also mentioned:

Furthermore, Fitch has rated our business at B- with a stable outlook. We have managed to keep this rating stable for the third consecutive year despite the Covid-19 setbacks, the war in Ukraine, and the shifts in the global economy. Fitch appreciated that Eleving Group had delivered on its promises to stakeholders and successfully continued its de-leveraging with an even more improved gross debt-to-tangible equity ratio (end-1Q23: 5.1x; end-2021: 7.7x). Another aspect is continuously strong profitability, mainly thanks to high-yielding products and mostly fixed-rate funding in place. Additionally, Eleving Group successfully absorbed negative impacts from its portfolio write-down in Ukraine and scale-down in Belarus, which indicates the overall quality of the Group’s portfolio and its high cash generation capabilities. The third factor highlighted by Fitch was the robust funding structure, with the largest €150M Eurobond maturing only in 2026 and the availability of flexible capital that can be raised through Mintos marketplace, a Latvian-licensed platform for retail investing in loan products. This rating is a crucial testimony to the soundness and quality of our adopted strategy.”

The end of Q2 marks the first full year of Eleving Group’s electric car-sharing product’s OX Drive operations in Latvia.

Within the first year, the operations has “grossed more than €500k in revenue. More than 2 million kilometers were traveled using OX Drive e-mobility service.”

The vehicle fleet has “increased two-fold since its launch and has surpassed the 100-vehicle threshold.”

Eleving Group plans “to double the existing vehicle fleet by the end of 2023.”

Eleving Group was founded in 2012 in Latvia and “joined the Mintos marketplace in 2015, originally offering loans for investment from Latvia.”

Since then, it has placed loans “on the marketplace froM15 countries in the Baltics and Central, Eastern, and South-Eastern Europe.”

Some equity investors of Eleving Group and Mintos “overlap.”

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