27.02.2011

Positive fourth quarter for Hertz

Hertz Equipment Rental has reported a four percent increase in fourth quarter revenues and improving profits.

Revenues for the quarter were $286 million 4.4 percent higher than for the same quarter last year. Pre-tax profits were $16.9 million compared to just $2.8 million in 2009.

The full year 2010 results are still negative with revenues down three percent to $1.07 billion. The pre-tax loss improved however to $14.6 million compared to a loss of $20.7 million in 2009.

The results have been achieved with a smaller fleet, the average acquisition cost of the rental fleet at year end was $2.7 billion three percent lower than at the same time in 2009.

Hertz group chief executive Mark P. Frissora said: "As previously announced on January 24, 2011, we beat our high end guidance for all adjusted earning metrics for the full year 2010 due to strong performance by our car rental businesses and consistent sequential improvement by Equipment Rental. We reduced costs by an additional $438 million during 2010, bringing our four-year total to almost $1.7 billion, and we generated approximately $380 million in incremental revenues from a variety of new products, services and geographies.”

“In 2011, Hertz will continue to focus on incremental cost management and revenue growth, as well as additional refinancing to optimise our global debt structure, including improvements to our maturity profile. In 2010, we completed almost $6 billion of global debt refinancing on highly favourable terms which will materially decrease our interest expense through 2015."

Vertikal Comment

Auction company results are different from most of the financials that we cover, there is an argument that when times are good used equipment sales fall, on the other hand prices go up and there is less competition from sales of equipment from company failures. Conversely a better market for used equipment means sellers find it easier to sell their equipment privately, rather than resorting to auctions – although if auction prices are higher and companies busier auctions could become more popular.

A tough business to second guess, main point is that the 2010 results are not a great surprise, all you need do is look at the used equipment disposals of the big American rental companies to see that fewer machines are being sold.

In 2009 there was a great deal of ‘de-fleeting’ going on which would have boosted used sales, that came to an end in 2010 as rental companies held steady. 2011 is likely to be better as equipment owners step up their replacement programmes to stem the aging of their fleets – freeing up used equipment for sale.