Grenke shares plummet 25% after shock profit warning

German financial services provider Grenke has issued a shock profit warning, leading to a 25% plunge in its share price.

The company blamed the downgrade on the "dramatic" impact of the coronavirus pandemic on its business, particularly in the automotive sector.

Grenke, which provides leasing and financing services to small and medium-sized businesses, said it now expects to report a pre-tax loss of between €150m and €200m for the first half of 2020.

The company had previously forecast a pre-tax profit of €100m for the six-month period.

The profit warning sent Grenke's shares tumbling by more than 25% in early trading on the Frankfurt Stock Exchange.

The company's shares have now lost more than half of their value since the start of the year.

Grenke said the coronavirus pandemic had "massively accelerated" the decline in demand for its financing services in the automotive sector.

The company said it had also been hit by the "significant" impact of the pandemic on its factoring business, which provides financing to businesses against their accounts receivable.

Grenke said it was taking steps to reduce costs and preserve cash, including a hiring freeze and a reduction in marketing spending.

The company also said it was in talks with banks to secure additional financing.

Grenke's profit warning is the latest sign of the impact of the coronavirus pandemic on the financial services sector.

Several other banks and financial institutions have also reported losses or downgrades in recent weeks.

The pandemic has led to a sharp decline in economic activity, which has in turn led to a decrease in demand for loans and other financial services.

The financial services sector is also facing challenges from the low interest rate environment, which is making it difficult for banks to generate profits.

It is unclear how long the coronavirus pandemic will last, or what the full impact on the financial services sector will be.

However, the profit warning from Grenke is a reminder that the pandemic is having a significant impact on the sector.