28.02.2013

Profits doubled at Hertz Equipment

US based Hertz Equipment Rental has published its full year numbers which show a strong recovery in both revenues and profitability.

Revenues for the full 12 months of 2012, were $1.38 billion, Over 14 percent higher than in 2011, while pre-tax profits more than doubled to $152.6 million, from $69.3 million last year.

Looking at the fourth quarter, revenues increased 21 percent to $385.3 million, and pre-tax profits improved a more modest 14 percent to $51.4 million.

The company says that the improved results are due primarily to the effects of increased volume and pricing, along with cost management initiatives.
The average fleet size during the fourth quarter, as measured by replacement cost, was up 13.7 percent on the year to $3.2 billion.

Chief executive Mark Frissora said: "I'm pleased that Hertz once again delivered record fourth quarter and full year financial performance due to sustained operational excellence, improving pricing during the fourth quarter and the positive impact of strategic investments, including the acquisition of Dollar Thrifty Automotive Group.”

“We also continue to realise best-in-class efficiency improvements with over $480 million of incremental cost savings in 2012, bringing total savings to over $2.6 billion since 2007. Net cash flows from operations topped $2.7 billion last year, a $484.7 million year-over-year increase, and accelerating cash flow generation will be a critical financial objective going forward.”

“Finally, 2012 marked our third consecutive year of significant double-digit percentage improvements in adjusted pre-tax income, EBITDA, and adjusted earnings per share, as well as margin expansion."

Vertikal Comment

These numbers show a strong improvement at Hertz and even though the equipment business only represents around 18 percent of the group’s revenues the fact that it has bounced back to healthy profitability is likely to encourage the group to retain it.

Although if it did harbour any desires to exit the equipment business, in order to focus on car rental and reduce its larger debt load, now is probably one of the best times to start looking at a sale.