* “Earnings before revenue” strategy, discipline on costs, gradual revival of demand in rentals business improve earnings position
* 9-month rental revenue up 5.1%, leasing revenue up 0.6%
* Outlook for 2010 unchanged
For the period January through September 2010 the Sixt Group generated a consolidated profit before taxes (EBT) of EUR 72.8 million after EUR 2.6 million for the same period the year before. As Sixt had expected, consolidated revenue for the international mobility service provider was down slightly from a year ago. Management reconfirmed its revenue and earnings outlook for full-year 2010, as well as its statement of earings projections.
Erich Sixt, Chairman of the Managing Board of Sixt AG: “The results for the first nine months are in line with our expectations. We owe that performance to our strategy of not waiting for demand to revive, but rather maintaining a focus on high-margin revenue and cutting costs. All the same, the expected slackening of the economy and other risks still give good cause for caution about the coming year.”
Group performance in the first nine months of 2010:
- The Group’s total revenue for January through September of the year came to EUR 1.17 billion. The 3.6% decrease from last year’s equivalent figure of EUR 1.21 billion was within expectations. Revenue generated outside Germany grew 3.1%, to EUR 268.7 million.
* Rental revenue grew 5.1%, to EUR 603.1 million. A particular contributor here was gains in Europe outside Germany (+11.5%), especially in Spain and Switzerland.
* Leasing revenue grew slightly, by 0.6%, to EUR 310.6 million.
* Revenue from the sale of used leasing vehicles, which is generally subject to fluctuations over the course of the year, decreased 6.2%, to EUR 160.5 million.
- The consolidated profit before taxes (EBT) for the first nine months improved EUR 70.2 million, from EUR 2.6 million to EUR 72.8 million. A particular reason for this performance was growing rental revenue, the avoidance of revenue that is not sufficiently profitable (under the principle of “earnings before revenue”), and the Group’s reduced costs.
- After nine months, Sixt reported a consolidated profit after taxes of EUR 54.9 million, after EUR 0.6 million for the same period last year.
Group performance in Q3 2010
- The 2010 consolidated revenue of EUR 406.5 million for the period from July through September, usually a strong quarter seasonally, was 4.8% below the comparable figure from 2009 (EUR 426.8 million).
* Rental revenue, at EUR 228.6 million, grew 9.4% compared to last year’s equivalent quarter.
* Leasing revenue, at EUR 99.0 million, was slightly below the equivalent period’s figure (–4.3%).
* Revenue from the sale of used leasing vehicles decreased to EUR 45.3 million (–25.8%).
- The Sixt Group showed an EBT of EUR 38.0 million for the third quarter of 2010, a gain of 35.2% from the same quarter last year (EUR 28.1 million).
Fleet policy remains conservative
The average number of vehicles in the Sixt rental fleet in Germany and other countries (not including vehicles in franchise countries) for January through September was 65,700, compared to an average of 67,700 for all of 2009 – a 3% decrease. After the first half, the decrease was still about 7%.
Financing base strengthened and broadened still further
The Sixt Group’s total assets as at 30 September 2010, at EUR 2.13 billion, were only slightly above the figure from 31 December 2009 (EUR 2.10 billion). The largest items on the assets side of the balance sheet were still rental assets (EUR 975 million) and leasing assets (EUR 736 million).
Equity at the end of September 2010 came to EUR 534 million, an increase of about 10% from the end of 2009 (EUR 485 million). The equity ratio rose to 25% (31 December 2009: 23%), and is thus still clearly higher than the average for the rental and leasing industry in general.
In October of this year, Sixt successfully placed a bond issue for a volume of EUR 250 million with institutional investors both inside and outside Germany. The bond issue was significantly oversubscribed, and is a further building block in strengthening the Sixt Group’s financing base. The six-year maturity improves the Group’s maturity profile for its financial liabilities. In July of this year, Sixt had already placed a borrower’s note loan on the market for EUR 80 million, with a maturity of five years.
Outlook
For full-year 2010, the Managing Board still expects a substantial increase in Group EBT as against last year. Consolidated revenue for full-year 2010 is still expected to be slightly below the prior year’s figure.
Looking to future business performance, the Managing Board remains fundamentally optimistic, even though the risks of setbacks for the economic recovery in Europe still persist, and in some cases have even increased. The goal remains to return again to the levels of profitability from before the financial crisis and the recession.
Developments in the operating business units
Vehicle Rental:
With their presence in Germany, France, the UK, Spain, the Benelux, Austria and Switzerland, Sixt subsidiaries cover far more than 70% of the European rental market. The Sixt brand is represented by franchisees in the remaining countries of Europe and other parts of the world. Sixt has Vehicle Rental operations in a total of about 100 countries. At 30 September 2010, there were 1,882 Sixt rental offices worldwide, 509 of them in Germany.
In the third quarter, Vehicle Rental focused on expanding its range of products and services. Important events included the launch of rentals of electric vehicles in Munich as part of a pilot project with RWE, an expansion of the range of vehicles offered internationally by Sixt Luxury Cars to include highly attractive models like the Porsche Panamera, and the addition of a Munich site to the SIXTI Car Club, which has been offering innovative car sharing in Berlin for two years now.
The Vehicle Rental Business Unit generated total revenue of EUR 691.2 million in January through September 2010, a 4.8% decrease. The EBT totalled EUR 59.7 million, compared to EUR –12.2 million for the same period the previous year. The third-quarter EBT was EUR 32.7 million, 35.5% more than for the same quarter of 2009 (EUR 24.1 million).
Leasing:
Sixt is one of the largest German vendor-neutral, non-bank full-service leasing companies, offering corporate and private customers a broad range of supplemental services for managing fleets and individual vehicles, in addition to pure finance leasing.
Although the European leasing markets have lately begun a slow revival, many corporations still remain reluctant to invest. In keeping with the principle of “earnings before revenue”, Sixt has focused in the current financial year primarily on improving its contract margins, as well as turning aside new business that is not sufficiently profitable. The number of leases inside and outside Germany (not including franchisees) came to 54,400 at the end of this September
(31 December 2009: 60,800 leases).
The Business Unit’s leasing revenue for the first nine months of the year increased 0.6% from the same period last year, to EUR 310.6 million. Total revenue in the Leasing Unit (including revenue from the sale of used vehicles) came to EUR 471.1 million (–1.8%). The focus on profitable revenue, together with general discipline on costs, generated EBT after three quarters of EUR 12.0 million (Q1-Q3 2009: EUR 4.0 million). Of this figure, EUR 4.4 million was attributable to the third quarter (Q3 2009: EUR 1.9 million).
