First Half 2017 Results: Europcar delivers strong revenue growth, accelerates its transformation and makes several major acquisitions including Buchbinder and Goldcar
- Revenue of €1,028 million up 10.1% at constant exchange rates with organic growth of 4.6%
- Adjusted Corporate EBITDA of €56 million up 2.7% at constant exchange rates
- Corporate Operating Free Cash Flow of €90 million up 10.6%
- Net loss of €27 million due to one-off restructuring costs and transformational M&A related fees
- Europcar accelerates pace and scale of acquisitions
- Europcar confirms its 2017 financial guidance
Saint-Quentin-en-Yvelines, 26 July 2017 – Europcar (Euronext Paris: EUCAR) today announced its results for the first half of 2017.
For Caroline Parot, Chief Executive Officer of Europcar Group:
“We delivered a solid set of operational and financial results for the first half of 2017 with a good operational performance across all of our corporate countries and three major business units which resulted in a strong double digit growth in both revenue and corporate operating free cash flow for the Group. During this first half, Europcar also significantly stepped up the pace of its acquisition momentum and is now in a position to have completed the bulk of its 2020 Ambition in terms of acquisitions.
Following the significant acquisitions of Buchbinder in May and Goldcar in June, we look forward to welcoming the experienced management teams of both companies into the Europcar Group with their best-in-class know-hows and solid track records in the low cost segment. The integration of these two highly compatible businesses into the Europcar Group will not only create a major player in the low cost segment but is also expected to deliver significant cost and revenue synergies for the Group as a whole. These game changing transactions also confirm the major role we want to play in our industry’s European consolidation process.
After the closing of these two major acquisitions expected in the second half of 2017, we intend to focus on their integration, delivering the expected synergies, and continuing to work on the digitalization of our customer journey, the development of our footprint and the pursuit of our operational excellence.
2017 first semester will be remembered as a semester of significant progress towards our ambitious strategic plan for 2020 and we feel confident in our ability to deliver our ambition of reaching at least €3 billion of annual revenue and an Adjusted Corporate EBITDA margin at the Group level of at least 14% excluding new mobility by the end of 2020.”
First Half 2017 Operational Highlights
The Group’s leisure business, responsible for 54% of Group rental revenue in the first half of 2017, acted as the main growth engine for the Group as it benefited from good yield management and a strong performance. The Group’s Vans & Trucks division and even more so the Group’s low cost division delivered a solid growth performance across our corporate countries as well as our franchisees.
The Group continued to focus on improving its customer service through some dedicated programmes such as Customer First and Air Force One (now focused on the Group’s 40 largest airport stations). These efforts have enabled the Group to deliver significant improvements in its net promoter scores with an increase of 4.3 points during the last twelve months. Group NPS reached 54.0 points in June 2017 compared to 49.7 points in June 2016.
In the first half of 2017, the Group has continued to make progress on two of its key operating metrics: fleet utilization and fleet cost per unit. The Group delivered a good performance in terms of fleet financial utilization with an 80 basis points increase in the first half of 2017 reaching 76.3% versus 75.5% in the first half of 2016. The Group also continued to show some good control of the Group’s fleet cost per unit per month which was down 1.8% in the first half of 2017 at €241 versus €245 in the first half of 2016 at constant exchange rates.
On 31 May 2017, Europcar Group and Easyjet announced a two year extension to their existing partnership which has been in place for 13 years. Since the partnership began in 2003, millions of customers have hired a car with Europcar through easyJet and have taken advantage of exclusive rates on rental services including the Lowest Price Guarantee and receiving a great service across all of the 31 countries the airline flies to.
First Half 2017 Financial Highlights
The Group generated revenues of €1,028 million in the first half of 2017, up 10.1% at constant exchange rates compared with the first half of 2016. On an organic basis, ie at constant exchange rates, constant perimeter and excluding petrol, the Group revenues grew by 4.6%. In the second quarter, Group revenue growth reached 13.7% and 6.6% on an organic basis.
This significant increase in Group revenues was the result of positive growth across all the Group’s key markets and in all of its three major business units with Cars growing by 7.7%, Vans & Trucks growing by 9.7% and Low Cost growing by yet another impressive 80%.
The number of rental days increased to 30.0 million in the first half of 2017, up 12.2% versus the first half of 2016. This growth in rental days was spread across all our key divisions with cars growing 8.2%, Vans & Trucks growing 14% and Low Cost growing 64%. On the other hand, Revenue per rental day decreased by 2.0% at Group level, mostly impacted by a 4.1% decline in the Vans & Trucks business unit reflecting a strategic focus on extending utilization and rental duration. Revenue per rental day decreased slightly by 0.5% in Cars and grew by 9.7% in Low Cost.
Adjusted Corporate EBITDA
First Half 2017 Adjusted Corporate EBITDA increased by 2.7% at constant exchange rates to €56.4 million compared to €54.7 million in the first half of 2016. The Adjusted Corporate EBITDA margin of the Group declined by 30 basis points to 5.5% in the first half of 2017 as a result of an increase in both our network costs and our operating variable costs. Both of these cost lines are impacted by the increase in Group perimeter following the acquisitions made by the Group (Locaroise, Ireland, Denmark & Ubeeqo) over the last twelve months as well as some price increases in airport fees in Spain.
Excluding the impact of the Group’s new mobility division, Adjusted Corporate EBITDA increased by 9.8% at constant exchange rates to €60.3 million in the first half of 2017 and the Adjusted Corporate EBITDA margin at 5.9% increased by 10 basis points versus its level in the first half of 2016.
Corporate Operating Free Cash Flow
First Half 2017 Corporate Operating Free Cash Flow increased by 10.6% to €90 million compared to €82 million in the first half of 2016. This increase is mainly the result of a better performance in terms of non-fleet working capital versus last year.
This solid Free Cash Flow generation enabled the Group to deliver a strong 65% operating free cash flow conversion rate. 
First Half 2017 operating income came in at €31.8 million compared to €71.9 million in the first half of 2016 mostly due to non-recurring items.
Net financing costs
Net financing costs under IFRS amounted to a €58.0 million net expense in the first half of 2017, up 5.3% compared to a net expense of €55.1 million incurred in the first half of 2016. The main reason for this is the full effect of the €125 million increase in the Group’s corporate bond issued in June 2016.
In the first half of 2017, the Group posted a net loss of €27.0 million, compared to a €2.8 net profit in the first half of 2016. This is due to the impact of a €39 million charge due to non-recurring expenses which relate to a downsizing expense at Europcar Germany’s headquarters, an increase of the Group’s consulting fees to accelerate its transformation and significant M&A fees paid following our recent acquisitions.
Corporate net debt continued to decrease to reach €104 million as of June 30, 2017 (vs. €200 million as of June 30, 2016) as a result of the Group’s strong free cash flow generation and its recent capital increase in June.
The Group paid out €59 million in dividends and spent €117 million for acquisitions and strategic investments over the last twelve months.
The fleet net debt was €4,037 million as of June 30, 2017 vs. €3,555 million in June 30, 2016. This increase reflects the higher number of vehicles in the fleet in order to sustain the growth of the Group’s operations and the fleet mix evolution.
In 2017, the Europcar Group plans to achieve the four following financial targets compared to 2016:
– Accelerating organic revenue growth ie above 3%
– Increase in adjusted corporate EBITDA margin (excluding New Mobility) ie above 11.8%
– A corporate operating free cash flow conversion rate above 50%
– A dividend payout ratio above 30%
The Group reiterates all four of its financial targets for the year 2017 and confirms that 2017 will be a year of significant progress towards our 2020 Group ambition of reaching €3 billion of revenue and 14% Corporate EBITDA margin (excluding New Mobility).
On 21 June 2017, the Group announced it had successful completed a capital increase through a private placement of shares with institutional investors at a price per share of €12 for a total of close to €175 million, representing approximately 10% of Europcar Group’s ordinary shares pre-capital raise.
On 13 July 2017, the Group signed a new secured €500 million Revolving Credit Facility (RCF) with a diversified pool of international banks. This Facility, which has replaced the existing €350 million Senior Revolving Credit Facility, will mature in June 2022. The Group has optimized the financing cost of this new RCF by a 25 bps reduction of the applicable margin. The €150 million increase of the nominal amount will allow the group to support its 2020 ambition and the related growing financing needs.
On 13 July 2017, the group also signed a €1,040 million Bridge Facility with a pool of international banks dedicated to the acquisition of Goldcar, the refinancing of its existing debts and financing of its fleet. This facility, which includes two tranches, has a 12 months maturity and can be extended for one or two additional 6 months periods depending on the tranche. Europcar should refinance this Bridge Facility in the future through a mix of bond issue and implementation of specific fleet financings.
On 17 February 2017, Europcar Group announced the acquisition of the remaining 24% minority stake in Ubeeqo which was held by the company’s founders. As a result, Europcar Group now owns a 100% of Ubeeqo.
After the acquisition of two of its franchisees in 2016, Locaroise in France and its Irish franchisee, The Europcar Group also announced the acquisition of its Danish franchisee in May 2017 and now operates in 11 corporate countries.
On 24 May 2017, Europcar Group announced the signing of an agreement to acquire Buchbinder, one of the largest car rental companies in Germany and Austria. Germany is the largest country for the Europcar Group in terms of revenues and through the acquisition of Buchbinder, the Group intends to significantly improve its penetration of the low cost segment and become the market leader in the local vans & trucks market.
On 13 June 2017, Europcar announced a 20% minority investment, through its Lab (entity dedicated to innovation) in SnappCar, the second largest international peer-to-peer car sharing player in Europe.
This investment is fully in line with the Group’s ambition to become a global mobility solutions leader, and providing a good alternative to car ownership thanks to a large portfolio of affordable solutions tailored to every specific need. It will enable SnappCar to take peer-to-peer car sharing to its next stage of development in Europe.
On 19 June 2017, Europcar announced it had signed an agreement with Investindustrial to acquire Goldcar, Europe’s largest low cost car rental company. With this strategic acquisition, the Europcar Group will increase its exposure to three major growth engines – the Mediterranean region, the leisure segment and the low cost segment – and will become a major player in the fast growing European low cost segment. The acquisition of Goldcar will create value for the Europcar Group as it will strengthen the Group’s expertise and know-how in low cost operations and will therefore significantly improve the revenue growth prospects of Europcar’s low cost business unit.
The acquisitions of Buchbinder and Goldcar are both subject to customary conditions precedent, including its approval by antitrust authorities, and are expected to close in the second half of the year 2017.
On 23 June 2017, the Leicester City Council Trading Standards Services opened an investigation into repair costs levied by Europcar UK. The Europcar Group has launched a thorough investigation into the matter and Europcar UK is fully cooperating with the authorities.
At this very early stage of the investigation, the Europcar Group has decided to record a provision of an amount of €44 million in its financial account for the first half of 2017.
Europcar will continue to communicate as appropriate as matters develop.
On 27 February 2017, the French Antitrust Authority announced the dismissal of its case against the French car rental industry. This decision is final and as no appeal has been filed, the Europcar Group has decided to release the provision of an amount of €45 million it had booked in its 2015 accounts in its financial accounts for the first half of 2017.
 Adjusted Corporate EBITDA is defined as current operating income before depreciation and amortization not related to the fleet, and after deduction of the interest expense on certain liabilities related to rental fleet financing. This indicator includes in particular all the costs associated with the fleet. See “Reconciliation with IFRS” attached.
 The Operating Free Cash Flow conversion rate is defined as Adjusted Corporate Operating Free Cash Flow / Adjusted Corporate EBITDA expressed as a percentage. The calculation is based on the Group’s Corporate EBITDA and Corporate Operating Free Cash Flow on a LTM (Last Twelve months) basis.