Car hire rental group Avis Europe has done well to steer itself through a tough market by slashing both its cost and debt levels. Headcount has been cut by 11 per cent and Avis has worked hard to merge with its Budget brand by combining the fleet and scaling back the head office.
All this shaved €149m (£135m) from the cost base and helped lower reduce debts by €375m to €758m. And capital tied up in the fleet, which averaged 100,000 cars last year, has fallen €350m thanks to better fleet utilisation rates - up 3.9 per cent for the year. However, this was not enough to prevent a 7 per cent decline in adjusted pre-tax profits before restructuring costs to €35.2m. Broker Investec Securities forecasts a similar result this year, but a recovery in profits to €40.6m in 2011 to produce EPS of 2.53¢.
The UK has proved resilient but Avis continues to find markets tricky in France, Germany, Italy and particularly in Spain, as customers held back on spending although this improved towards the end of the year. Avis enjoyed a hike in rental sales per day with a 2.4 per cent increase in the second half, which helped margins move a shade higher.
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AVIS EUROPE (AVE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 32.5p | MARKET VALUE: | £299m | |
| TOUCH: | 32-33p | 12-MONTH HIGH: | 44p | LOW: 3.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 7¢* | NET DEBT: | €758m | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2005 | 1.28 | 20.1 | 1.5 | nil |
| 2006 | 1.34 | 10.7 | 0.5 | nil |
| 2007 | 1.33 | 33.2 | 0.3 | nil |
| 2008 | 1.67 | 3.0 | -1.1 | nil |
| 2009 | 1.40 | 4.5 | nil | nil |
| % change | -16 | +50 | - | - |
*Includes intangible assets of €13.3m, or 1.4¢ a share | ||||
