Savvy strategies steer Europcar through bear market

2nd Apr 2009

Rapid-response fleet cuts and integrated cost synergies have helped Europcar post a resilient set of annual figures, despite a sharp slump in demand due to the downturn. The car hire giant posted a stable revenue of €2.1 billion, up 0.5 percent, despite an unprecedented contraction of demand in second half, whilst consolidated growth was 2.2 percent higher.Europecar said demand for car rental services fell particularly sharply in the last quarter, so in response it made a rapid reduction of its fleet, which contracted from 213,134 in December 2007 to 194,507 in December 2008. This helped it remain disciplined on pricing, thereby increasing its average Revenue Per Day (RPD) marginally in 2008, including in the last quarter.

The group also deployed operating-efficiency programmes, which helped consolidated EBITDA margin rise 0.5 percentage to 32.3%. Synergies generated by the integration of businesses acquired in previous years also contributed to this performance.

The gains were not enough to compensate for the combined effect of tough market conditions in the last four quarter and higher fleet holding costs across the year, however. Adjusted operating margin for the year fell 2.2 percentage from 2007 to 11.9%.

The company responded by expanding the scope of its operating efficiency and cost-reduction programmes, and in the 4th quarter it launched full reviews of its rental network and overhead costs.

During the year, the group continued to expand its international network, acquiring its master franchisee for Asia-Pacific, which remains the fastest-growing car rental market in the world. This contributed €89 million to Europcar’s total revenue for 2008 on a full-year basis.


In September, Europcar concluded a strategic commercial alliance with Enterprise Rent-A-Car, the market leader in North America. The two new partners now collectively constitute the world’s largest car rental network, with 13,000 locations in over 150 countries.

Net debt also improved, falling by 1.7% at constant exchange rates: to €3,260 million in 2008 from €3,315 million in 2007, helped by tight control over working capital, and the rapid reduction of fleet in the last quarter. The group said its liquidity remains robust and that it has no refinancing deadline before mid-2011.

Salvatore Catania, Chief Executive Officer of Europcar Group, said: “In the second half of 2008, our industry experienced a strong decline in demand, due to the economic downturn.”

“Thanks to our balanced geographic and business segment base, Europcar performed better than the other major players in our industry. We are nonetheless responding to unprecedented challenges to our industry with measures of far-reaching scope and ambition. At the same time, we will maintain our pricing discipline. These measures will allow us to adapt our business model and protect our profitability. They will also help us to further enhance Europcar’s leadership position, built on business model flexibility, quality of service and unique footprint.”

“We are determined to emerge from the downturn as an even stronger company,” he added.


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