Sixt AG, Germany’s largest car rental company and one of Europe’s leading mobility services providers, has got off to a good start in financial year 2010. In Q1, seasonally a weaker quarter, profit before taxes (EBT) improved by EUR 42.6 million year-on-year to EUR 8.0 million.
Revenue was encouraging in view of the continuing economic uncertainty. In Vehicle Rental, revenue matched the high level of the prior-year quarter, while the Leasing Business Unit bucked the industry trend to record revenue growth of almost 5%. The Managing Board confirms the Group’s forecasts for full-year 2010 and expects a significant increase in consolidated EBT (2009: EUR 15.1 million).
Erich Sixt, Chairman of the Managing Board of Sixt AG: “We are pleased with our start to 2010. We have achieved an extremely encouraging improvement in our results and, with our three-month EBT of EUR 8 million, we have already generated more than half of our entire profit for 2009. There are several reasons for our strong performance: we systematically avoid revenue that is not sufficiently profitable, we have our costs under control and we pursue a cautious fleet policy. These will remain our guiding principles over the course of the year.”
Developments in the Group in the first quarter of 2010
* At EUR 366.0 million, total consolidated revenue in the first quarter of 2010 was down 2.8% on the prior-year period (EUR 376.7 million).
o At EUR 176.0 million, rental revenue remained at the high level of Q1 2009 (EUR 176.8 million). It should be noted here that Sixt consciously avoided revenue that is not sufficiently profitable.
o Other revenue from rental business was 25.5% below the previous year due to structural changes and, at EUR 28.7 million, was in line with the Group’s planning.
o Leasing revenue increased by 4.9% to EUR 106.8 million (Q1 2009: EUR 101.8 million).
o Revenue from the sale of used leasing vehicles, which is generally subject to fluctuations over the course of the year, was down 8.8% year-on-year to EUR 53.2 million (Q1 2009: EUR 58.4 million).
* Consolidated earnings before net finance costs and taxes (EBIT) amounted to EUR 19.5 million in the first quarter.
* Consolidated profit before taxes (EBT) totalled EUR 8.0 million in the period from January to March 2010. The substantial improvement in earnings by EUR 42.6 million in Q1 2010 is primarily attributable to the following factors:
o Stable or increasing operating revenue despite a continued difficult market environment in Europe;
o Improved revenue quality; avoidance of revenue that is not sufficiently profitable (“earnings before revenue”);
o Cost reductions and efficiency gains throughout the Group.
* Sixt reported a quarterly profit after taxes of EUR 6.4 million.
Cautious fleet policy
As announced, Sixt pursued a cautious fleet policy in its vehicle rental activities in the first quarter of 2010. The average number of vehicles in Germany and abroad (excluding franchise countries) was 60,100 compared with 67,700 in full-year 2009 (-11%). Capacity utilisation has increased sharply on the back of stable rental revenue. The rental fleet was again expanded towards the end of the quarter. Over the course of the year, Sixt will be able to respond flexibly and rapidly to changes in demand and to adjust its fleet accordingly.
Equity base remains strong
As at the reporting date of 31 March 2010, the Sixt Group’s equity amounted to EUR 493 million, after EUR 485 million as at 31 December 2009 (+1.6%). At 22.3% (31 December 2009: 23.1%), the equity ratio remained clearly above the average in the German rental and leasing industry.
Outlook for full-year 2010
The Managing Board remains optimistic for financial year 2010 despite the continuing economic uncertainty. Sixt will systematically continue pursuing its goal of increasing the profitability of its operating business according to the “earnings before revenue” principle and of avoiding revenue that is not sufficiently profitable. As a result, consolidated revenue for full-year 2010 is expected to be down slightly year-on-year. On the earnings side, Sixt will profit from increased revenue quality and the measures to cut costs and enhance efficiency initiated in 2009. The Managing Board is therefore confirming Sixt’s goal of significantly improving consolidated EBT this year, in particular following the encouraging first quarter and business developments in the second quarter to date.
This forecast assumes that there are no unforeseen negative events with a major impact on the Group.
Developments at the operating business units
Sixt’s companies cover more than 70% of the European rental market. In further European countries and in other global regions, the Sixt brand is represented by a close-knit network of franchisees.
The Group continued to drive forward its internationalisation in the first quarter of 2010 by adding new franchisees in Jordan, Bosnia-Herzegovina and Libya. The number of rental offices worldwide was 1,868 at the end of Q1 (Sixt-Corporate countries and franchisees).
The Business Unit’s activities also focused on upgrading and extending mobile applications for vehicle reservation. Smartphone applications were expanded to include innovative and convenient features based on customer wishes and needs. For example, customers making reservations can now send an additional message containing their wishes or comments to the relevant rental office.
In March 2010, Sixt Vehicle Rental was awarded the “Bavarian Quality Prize” by the Bavarian Economics Ministry. Sixt was honoured for the long-term quality of its products and services in the “Business Service Providers” category.
The Vehicle Rental Business Unit generated rental revenue of EUR 176.0 million in the first three months of 2010
(-0.4%). Overall, the Business Unit’s quarterly revenue was EUR 204.7 million (Q1 2009: EUR 215.2 million; -4.9%). EBT amounted to EUR 3.6 million (Q1 2009: EUR -38.6 million).
In Germany, Sixt is one of the largest vendor-neutral, non-bank full-service leasing companies, offering corporate and private customers a wide range of additional services for managing fleets and single vehicles, as well as pure finance leasing.
In the first quarter of 2010, Sixt Leasing continued to systematically focus new business on higher-revenue full-service agreements and therefore improved contract margins. Overall, however, its operations remained affected by the general reluctance by businesses to invest. Against this background, the number of lease agreements in Germany and abroad (excluding franchise partners) fell by around 5% from 60,800 at year-end 2009 to 57,600 at the end of Q1 2010.
In the first three months of 2010, the Business Unit increased leasing revenue by 4.9% year-on-year to EUR 106.8 million, partly due to the additional revenue in the full-service segment. The Business Unit’s total revenue (including revenue from the sale of used vehicles that is subject to fluctuations) amounted to EUR 160.0 million (-0.1%). EBT rose sharply to EUR 3.4 million in the first quarter (Q1 2009: EUR 0.2 million) due to revenue growth and the focus on higher-margin business.