Avis upbeat despite profits fall
Avis Europe took a sharp fall in profits in its stride today, as the car rental company instead hailed “crucial steps” in a recovery plan.
The group, which operates the Avis and Budget brands in Europe and many regions outside the US, said there had been encouraging signs from the first phase of its turnaround plan, but warned that its efforts would not show significant results until next year.
The cost of implementing the revival strategy impacted on half-year figures today, as Avis reported underlying profits of €3.2m, against €9.6m a year earlier.
With trading conditions tougher in the wake of the September 11, the company has issued a string of profit warnings and recently held a €163m cash call to investors in a bid to fund initiatives and bolster its balance sheet.
Revenues in the six months to June 30 were 0.6% lower at €582m, but Avis Europe said it offset the weak pricing environment with cost controls in the management of its fleet.
It is taking steps to improve its performance with an investment of €15m, which includes strengthening its sales and marketing operations, particularly over the internet.
Avis has also begun a second phase of changes, which include targeting more profitable customer segments and the realisation of further cost savings.
Chief executive Murray Hennessy said: “We have made a number of planed key investments during the first half, in line with our strategy to return Avis to long-term profitable growth.
“Whilst these investments have impacted our operating profit for the period and will, in the main not show results until 2006, they are crucial steps in our recovery plan and we are beginning to see the early benefit on the business.”
The update encouraged investors today as shares rose by more than 6% to 53p - still off the 192p seen five years ago.
Profits at the bottom-line were €7m, against €23.8m earlier.
