BADEN-BADEN (dpa-AFX) - Unfavorable exchange rates and interest rate effects have caused leasing specialist Grenke 's profits to fall at the start of the year. Despite higher operating income, the bottom line was only a profit of just under 16 million euros, around 23 percent less than a year earlier, the company announced in Baden-Baden on Thursday. Although CEO Sebastian Hirsch still expects a consolidated profit of 80 to 90 million euros for the year as a whole, the news was met with a slide in the share price on the stock exchange.

At times, Grenke shares fell by more than eight percent in the morning. In the morning, the share was still down almost seven percent at 29.20 euros, making it one of the biggest losers in the SDax small cap index.

Analyst Marius Fuhrberg of Warburg Research attested Grenke a solid start to the year, but found shortcomings in the details. Net interest income fell slightly short of expectations due to higher refinancing costs. Net profit also fell somewhat more than expected. The company would have to counter this development in the course of the year and pass on the higher interest expenses to its customers.

The Management Board explained the drop in profits in the first quarter with "erratic exchange rate fluctuations" and the resulting valuation effects. In addition, the valuation of interest rate derivatives ate into earnings. However, Grenke was able to increase its operating income by around nine percent to 99.6 million euros, and selling and administrative expenses fell by just under four percent.

"We expect to achieve consolidated earnings at the end of the year within the forecast corridor," said Hirsch, the company's CEO. Although special effects in the first quarter had a negative impact, the Management Board believes that offsetting effects in the course of the year are "entirely possible. In any case, the operating business is proceeding according to plan.

At present, Grenke itself has to pay higher interest rates and, according to its own statements, can only pass them on to its customers after a delay of several months. The board is also encouraged by the "stable-positive business trend" since the end of the Corona pandemic. "That's why it's important to remain calm and focus on long-term success," Hirsch said, according to the statement.

For example, new business has been growing by double-digit percentages for six quarters in a row, he said. "This growth is the secure source for our earnings this year as well as in the following years." For 2023, the manager continues to expect new leasing business of 2.6 to 2.8 billion euros./stw/men/mis