Sixt Group reports pre-tax profit of EUR 28 million in Q3 2009

Sixt Group reports pre-tax profit of EUR 28 million in Q3 2009

Sixt AG, Germany’s largest car rental company and one of Europe’s leading mobility services providers, again recorded a high level of stable demand in both its Vehicle Rental and Leasing Business Units in the third quarter of 2009, despite the ongoing difficult economic environment. The Group saw a further clear improvement in earnings as against the first two quarters. At EUR 23.0 million, quarterly profit was up 8.6% on the previous year’s figure. At EUR 28.1 million, Sixt’s consolidated profit before taxes (EBT) in Q3 approached the figure for the prior-year quarter (EUR 30.1 million). The Group again reported positive nine-month EBT. In addition to stable demand, this upward trend is due to the positive effects of the reduced rental fleet and strict cost management.
Consolidated revenue in the third quarter was down 11.3% year-on-year, but up 5.1% on Q2 2009 and up 13.3% on Q1 2009.

Erich Sixt, Chairman of the Managing Board of Sixt AG: “The satisfactory demand in the first nine months shows that the need for mobility among companies and private individuals is not declining – even in an economic crisis. In addition, we are profiting more and more from the positive effects of our cautious rental fleet planning. In line with this, Sixt took a major step forward in its earnings situation in the third quarter. This makes us confident that we can achieve our earnings target for full-year 2009.”

Developments in the Group in the third quarter of 2009
At EUR 426.8 million, total consolidated revenue in the third quarter of 2009 declined by 11.3% as against the prior-year period (EUR 481.3 million).
o   Rental revenue fell by 3.0% from the previous year’s figure of EUR 215.3 million to EUR 208.9 million.
o   Other revenue from rental business amounted to EUR 52.2 million, down 39.5% compared with Q3 2008. As explained in the previous quarters, the decline relates mainly to the reduction in the rental fleet and the switch in financing part of the fleet from purchases to leasing.
o   Leasing revenue reached EUR 103.5 million, down slightly
(-3.4%) on the prior-year quarter (EUR 107.2 million).
o   Revenue from the sale of used leasing vehicles, which is generally subject to fluctuations, fell by 14.4% from EUR 71.2 million in the previous year to EUR 60.9 million.

Consolidated profit after taxes amounted to EUR 23.0 million in the period from July to September, 8.6% more than the EUR 21.2 million reported in the prior-year period. The Group reported EBT of EUR 28.1 million for the third quarter, slightly below the prior-year figure of EUR 30.1 million (-6.8%). Following EBT of EUR -34.6 million in the first quarter and EUR +9.1 million in Q2, this represents a continual improvement in earnings in the course of 2009 due to the Group’s targeted adjustment measures in its operating business.

Developments in the Group in the first nine months of 2009
At EUR 1.21 billion, total consolidated revenue was down 9.4% on the prior-year period (EUR 1.34 billion). Abroad, Sixt generated revenue of EUR 260.7 million in its European corporate countries, a slight decline of 2.8% (first nine months of 2008: EUR 268.2 million).
o   Rental revenue virtually matched the high previous year’s level, at EUR 573.8 million (Q1-3 2008: EUR 590.4 million; -2.8%).
o   Other revenue from rental business amounted to EUR 152.2 million compared with EUR 242.2 million in the prior-year period, mainly due to the effects of adjusting the rental fleet.
o   Leasing revenue has been extremely stable in the course of the year and reached EUR 308.8 million (first nine months of 2008: EUR 313.5 million; -1.5%).
o   Revenue from the sale of used leasing vehicles was EUR 171.0 million, down 8.0% on the same period of 2008 (EUR 186.0 million).

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Sixt reported positive consolidated EBT of EUR 2.6 million for the first nine months of 2009 (Q1-3 2008: EUR 95.9 million). Profit after taxes amounted to EUR 0.6 million (first nine months of 2008: EUR 66.1 million).

A fifth fewer vehicles added to the fleets
In the period from January to September 2009, Sixt added a total of 96,400 vehicles (prior-year period: 120,900) with a total value of EUR 2.20 billion (prior-year period: EUR 2.78 billion) to its rental and leasing fleet. This represents a decline of 20% in the number of vehicles and 21% in the investment volume. The reductions are due to the Group’s cautious fleet policy in view of the uncertain economic environment.

In the Vehicle Rental Business Unit, the corresponding decreases in investments amounted to 20% in terms of both vehicle numbers and the investment value. The average size of the rental fleet in Germany and abroad fell from 72,300 vehicles in full-year 2008 to 69,100 vehicles in the period from January to September 2009 (-4%).

EUR 300 million bond successfully placed – refinancing secured for 2010
At the end of October, Sixt AG exploited the favourable capital market environment and thus secured its refinancing requirements for 2010 by placing a bond with a principal amount of EUR 300 million (maturing in 2012; interest rate of 5.375% p.a.). The bond was purchased by institutional investors and retail-focused banks and was oversubscribed several times.

When issuing the bond, Sixt profited from its continued sound balance sheet ratios. The Group’s total assets amounted to EUR 2.01 billion as at 30 September 2009, significantly below the year-end 2008 figure (EUR 2.47 billion). A key factor here was the reduction in rental assets by EUR 380 million to EUR 678 million.

As at the reporting date of 30 September 2009, the Sixt Group’s equity amounted to EUR 475 million, after EUR 493 million as at 31 December 2008. The equity ratio increased to just under 24% compared with the previous year (31 December 2008: 20%) and therefore remained well above the industry average.

Outlook for full-year 2009
The Managing Board confirmes the Group’s goal of reporting clearly positive EBT for full-year 2009. This is based on demand, which is satisfactory despite the difficult economic environment, and on additional positive effects in operating costs. This forecast assumes that there are no unforeseen negative events with a major impact on the Group.


Developments at the operating business units

Vehicle Rental:
With its presence in the core countries, i.e. Germany, France, the UK, Spain, Benelux, Austria and Switzerland, Sixt covers well over 70% of the European rental market through subsidiaries. In the other European countries and in other global regions, the Sixt brand is represented by a close-knit network of franchisees.

Sixt continued to expand its global network in the third quarter of 2009. In the Benelux countries, Sixt now has two additional centrally located rental offices in Brussels and Maastricht. The Group found an experienced and efficient franchise partner for the two African countries of Angola and Mozambique. In Mexico, Sixt expanded its franchise partner’s office network during the third quarter. Overall, Sixt is now represented in 100 countries for vehicle rental.

The Vehicle Rental Business Unit generated rental revenue of EUR 573.8 million in the first nine months of 2009; demand in Sixt’s corporate countries remained virtually stable overall (-2.8%). Rental revenue in Germany declined by 3.1%. Other revenue from rental business fell by 37.2% in the period from January to September to EUR 152.2 million due to the adjustment of the fleet size and the partial switch in refinancing.

The Business Unit generated EBT of EUR 24.1 million in the third quarter, after EUR 27.5 million in Q3 2008. It therefore significantly improved its earnings as against the second quarter of 2009 (EUR +2.2 million).

Leasing:
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.

The number of leases recorded by Sixt in Germany and abroad (excluding franchise partners) was 62,700 as at 30 September 2009, down 3.7% on year-end 2008 (65,100). In addition to the general reluctance to invest due to the economic crisis, the slight decline is due to the strategic shift in Sixt’s leasing portfolio away from low-revenue agreements towards higher-revenue full-service leasing.

The Business Unit recorded revenue from leasing activities of EUR 308.8 million in the first nine months of 2009, thus virtually maintaining the strong prior-year level (EUR 313.5 million). The Business Unit’s total revenue (including revenue from the sale of used vehicles that is subject to fluctuations) amounted to EUR 479.8 million in the period from January to September, 3.9% down on the prior-year period.

At EUR 4.0 million, EBT in the first nine months was up 23.9% on the previous year (EUR 3.2 million) despite the increase in financing costs due to the financial crisis and a weak used car market. EUR 1.9 million of this was attributable to the third quarter (prior-year period: EUR 0.4 million).