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11/09

Europcar Group: Q3 Revenue and Adjusted Corporate Ebitda increase driven by strong leisure momentum

Note: This press release contains unaudited consolidated financial figures established under IFRS by Europcar Groupe’s Management Board and reviewed by the Supervisory Board on November 7th, 2016.

 

  • Q3 total revenue increased by 5.1% at constant currency[1] to €707 million
  • Q3 Adjusted Corporate EBITDA increased by 4.5% at constant currency to €159 million
  • Last Twelve Month Adjusted Corporate EBITDA reached €250 million
  • Strong cash generation with corporate free cash flow at €166 million YTD
  • A record Net Profit close to €100 million YTD
  • Confirmation of Full year 2016 guidance

 

Saint-Quentin-en-Yvelines, 9 November, 2016 – Europcar (Euronext Paris: EUCAR) announces today its results for the third quarter and the first nine months of 2016.

 

Philippe Germond, Chairman of the Management Board stated:  

“These solid results confirm the robustness of the Group business model and its capacity to deliver sustained profitable growth. The strong summer season was totally in line with our expectations, successfully supported by our brand strategy notably in Southern Europe and by operational excellence everywhere in the group. In addition, we have fully enjoyed the benefit of the reshape of the capital structure following the IPO allowing us to register a record Net Profit close to 100 million euros for the first nine months. As stated during our first investor day on Oct. 4, this positive growth trend of our revenues and profitability enables us to confirm our FY 2016 Guidance.”

 

All data in €m, except if mentioned

Q3 2016

Q3 2015

Change

Change at constant currency

Number of rental days (million)

19.0

17.8

6.5%

 

Average Fleet (thousand)

256.7

242.8

5.7%

 

Fleet utilization rate

80.3%

79.7%

+0.6pt

 

Total revenues

707

693

2.1%

5.1%

Rental revenues

665

650

2.4%

5.3%

Adjusted Corporate EBITDA

159

154

3.0%

4.5%

Adjusted Corporate EBITDA Margin

22.5%

22.3%

+0.2pt

 

Last Twelve Months Adjusted Corporate EBITDA

250

247

1.1%

 

LTM Adjusted Corporate EBITDA Margin

11.7%

11.7%

 

Operating Income

169

163

3.2%

 

Net profit/loss

96

99

-3.3%

 

Corporate Free Cash Flow

84

92

-8.7%

 

Corporate Net Debt at end of the period

155

 

 

 

 

Revenues

 Q3 2016 total revenue amounted to €707 million compared to €693 million in 2015, representing a 5.1% increase at constant currency. Excluding Locaroise, its third French Franchisee (fully consolidated since July 1st 2016), total revenues growth reached 4.5%. This increase is mainly driven by a +5.3% growth at constant currency in rental revenue (€665 million) partly off-set by the decrease in petrol prices. This performance was supported by a good leisure momentum across all our brands, and an improvement in the Business segments compared to H1 2016.

Rental days volume increased by 6.5% compared to Q3 2015, at 19.0 million, thanks to a positive evolution in leisure over Q3 on both Europcar® and InterRent® brands, notably in Spain, Italy and Portugal. The three Business Units of Cars, Vans & Trucks and Low cost all contributed to this performance. Compared to the third quarter 2015, all countries enjoyed growth except Belgium, which was flat despite consequences of the terrorist attacks.

RPD for the Cars business unit was up 0.8% at constant currency, despite the French terrorist attack in Nice in July, and thanks to strong yield management. On a consolidated basis, the Q3 RPD decreased by 1.1% at constant currency impacted by the success of InterRent and the development of the Vans & Trucks strategy.

For the first nine months of the year, total revenues amounted to €1,655 million, up 2.4% at constant currency compared to last year. Excluding petrol impact and the Locaroise acquisition, the increase was 2.4% at constant currency.

Adjusted Corporate EBITDA

Q3 Adjusted Corporate EBITDA reached €159 million versus €154 million in Q3 2015 reflecting the strong performance during the summer season despite the negative currency effect linked to the depreciation of the pound sterling. The growth amounted €7 million (+4.5%) at constant currency. Q3 Adjusted Corporate EBITDA margin reached a record level of 22.5%.

 The last twelve months Adjusted Corporate EBITDA amounted to €250 million, up 1.1% year over year, despite a challenging environment since the beginning of 2016. This performance demonstrates the robustness and resilience of the Group’s business model. The latter relies on a de-risked fleet asset base and a capacity to deliver sustained profitable growth by leveraging on the different pillars of its state of the art revenues and capacity management (namely volume, price and utilization rate), while optimizing its cost structure and building the future. Europcar Group pursues its investments in the deployment of InterRent brand and network, in its customer journey programs, IT and Europcar Lab’s, etc.  

  Operating income

 Q3 operating income came in at €169 million in 2016, compared to € 163 million in 2015.

For the first nine months, operating income was €241 million versus €182 million in 2015. Last year’s figure included IPO costs and non-recurring items (notably the net negative impact of certain proceedings and reorganization charges linked to the Fast Lane transformation plan roll out).

 Net Profit

 Q3 net profit amounted to €96 million in 2016, compared to €99 million in Q3 2015. This slight decrease was notably linked to the pound sterling currency effect and the further investments in Ubeeqo and Car2Go Europe (both equity accounted investments).

For the first nine months, net income was a profit of €99 million in 2016 compared to a loss of €57 million in 2015. This improvement reflects the full benefit of the reshape of the capital structure following the IPO at the end of Q2 2015, while last year was also impacted by other non-recurring items.

 Corporate free cash flow and Corporate Net Debt

Corporate free cash flow amounted to €84 million in Q3 compared to €92 million last year. For the first nine months Corporate free cash flow was €166 million compared to €116 million for the same period in 2015. This Corporate free cash flow encompassed Adjusted Corporate EBITDA, flat on a reported basis year over year at €214 million, and a good management of non-fleet working capital over the period. As a reminder, 2015 free cash flow was also impacted by one-off cash items.

Corporate net debt amounted to €155 million as of September 30, 2016 (vs. €235 million as of December 31, 2015). The corporate net debt leverage is at 0.6x[2].

Acquisition plan

The Group pursued its dynamic acquisition plan, reaching recently a further step in its path to be a key mobility provider with the acquisition of Brunel. As a ride-hailing company, Brunel allows the Group to give its customers even greater choice for their travel needs, providing Europcar with a strong competitive advantage.

 As a reminder, since the beginning of 2016 the Group has acquired Locaroise, its third French Franchisee (fully consolidated since July 1st), Bluemove a mobility tech start-up and car sharing leader in Spain, through Ubeeqo, as well as a minority investment in Wanderio, a multi modal search and comparison platform. Over the first nine months of 2016, Europcar has cashed out about €27 million in its acquisition plan.

 Confirmation of 2016 full year guidance

 As a results of the strong performance over the summer season, the Group reiterates the 2016 guidance, announced on July 25, 2016, showing the resilience of its business model while facing a number of headwinds, including an increasingly unfavorable currency from the depreciation of the pound sterling. As a reminder, the group is committed to the following guidance for the full year:

–        Slight increase of revenue on an organic basis[3]

–        Adjusted Corporate EBITDA above last year €251million 

–        Adjusted Corporate EBITDA conversion to Corporate free cash flow above 50%.

 In addition, considering acquisition achievements for this year 2016, the Group will deliver to its shareholders a dividend pay-out to an exceptional level of at least 50% based on 2016 Net Income[4].

 

About Europcar Groupe

Europcar shares (EUCAR) are listed on the Euronext Paris stock exchange. Europcar is the European leader in vehicle rental service and is also a major player in mobility markets. Active in more than 140 countries, Europcar serves customers through an extensive vehicle rental network comprised of its wholly-owned subsidiaries as well as sites operated by franchisees and partners. In addition to the Europcar® brand, the company offers low-cost vehicle rentals under the InterRent® brand. A commitment to customer satisfaction drives the company and its 6,000 people forward and provides the impetus for continuous development of new services. The Europcar Lab was created to respond to tomorrow’s mobility challenges through innovation and strategic investments, such as Ubeeqo and E-Car Club. 

 

Forward-looking statements

This press release includes forward-looking statements based on current beliefs and expectations about future events. Such forward-looking statements may include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product development, as well as statements, regarding performance or events. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”, “projects”, “may”, “would”, “should” or the negative of these terms and similar expressions. Forward looking statements are not guarantees of future performance and are subject to inherent risks, uncertainties and assumptions about Europcar Groupe and its subsidiaries and investments, trends in their business, future capital expenditures and acquisitions, developments in respect of contingent liabilities, changes in economic conditions globally or in Europcar Groupe’s principal markets, competitive conditions in the market and regulatory factors. Those events are uncertain; their outcome may differ from current expectations which may in turn materially affect expected results. Actual results may differ materially from those projected or implied in these forward-looking statements. Any forward-looking statement contained in this press release is made as of the date of this press release. Other than as required by applicable law, Europcar Groupe does not undertake to revise or update any forward-looking statements in light of new information or future events.

 

The results and the Group’s performance may also be affected by various risks and uncertainties, including without limitation, risks identified in the “Risk factors” of the Annual Registration Document registered by the Autorité des marchés financiers on April 14, 2016 under the number R. 16-021 and also available on the Group’s website: www.europcar-group.com.  

 This press release does not contain or constitute an offer or invitation to purchase any securities in France, the United States or any other jurisdiction.

 

 Further details on our website: finance.europcar-group.com

  

Appendix 1 – Management Profit and Loss

 

Q3 2016

Q3 2015

All data in €m

9M 2016

9M 2015

707.2

692.6

Total revenue

1,655.1

1,653.1

(144.0)

(142.9)

Fleet holding costs, excluding estimated interest included in operating leases

(370.1)

(372.0)

(235.6)

(221.9)

Fleet operating, rental and revenue related costs

(572.4)

(561.5)

(84.1)

(89.4)

Personnel costs

(253.7)

(258.6)

(55.3)

(55.5)

Network and head office overhead

(166.4)

(163.7)

1.4

6.2

Other income and expense

4.0

8.3

(138.0)

(138.7)

Personnel costs, network and head office overhead, IT and other

(416.1)

(413.9)

(17.1)

(18.0)

Net fleet financing expense

(46.8)

(48.8)

(13.7)

(16.8)

Estimated interest included in operating leases

(36.1)

(42.5)

(30.8)

(34.8)

Fleet financing expenses, including estimated interest included in operating leases

(83.0)

(91.3)

158.8

154.2

Adjusted Corporate EBITDA

213.6

214.4

22.5%

22.3%

Margin

12.9%

13.0%

(6.5)

(8.1)

Depreciation – excluding vehicle fleet

(22.3)

(24.1)

(0.8)

(0.8)

Other operating income and expenses

2.5

(56.6)

(15.3)

(10.7)

Other financing income and expense not related to the fleet

(40.6)

(150.0)

136.3

134.6

Profit/loss before tax

153.1

(16.3)

(34.1)

(33.3)

Income tax

(45.1)

(35.1)

(6.1)

(1.9)

Share of profit/(loss) of associates

(9.0)

(6.0)

96.1

99.4

Net profit/(loss)

98.9

(57.4)

  

 

Appendix 2 – IFRS Income statement 

Q3 2016

Q3 2015

All data in €m

9M 2016

9M 2015

707.2

692.6

Total revenue

1,655.1

1,653.1

(157.7)

(159.7)

Fleet holding costs

(406.2)

(414.5)

(235.6)

(221.9)

Fleet operating, rental and revenue related costs

(572.4)

(561.5)

(84.1)

(89.4)

Personnel costs

(253.7)

(258.6)

(55.3)

(55.5)

Network and head office overhead

(166.4)

(163.7)

1.4

6.2

Other income and expense

4.0

8.3

(6.5)

(8.1)

Depreciation – excluding vehicle fleet

(22.3)

(24.1)

169.5

164.2

Recurring operating income

238.1

239.1

(0.8)

(0.8)

Other non-recurring income and expenses

2.5

(56.6)

168.7

163.4

Operating income

240.6

182.4

(32.4)

(28.7)

Net financing costs

(87.5)

(198.8)

136.3

134.6

Profit/(loss) before tax

153.1

(16.3)

(34.1)

(33.3)

Income tax

(45.1)

(35.1)

(6.1)

(1.9)

Share of profit/(loss) of associates

(9.0)

(6.0)

96.1

99.4

Net profit/(loss)

98.9

(57.4)

96.3

99.5

Net profit/(loss) attributable to Europcar owners

99.2

(57.3)

 Q3 IFRS P&L presented for conveniences purposes, not prepared on a standalone basis but obtained by difference between 9M YTD P&L and H1 P&L

 

 

Appendix 3 – Reconciliation 

Q3 2016

Q3 2015

All data in €m

9M 2016

9M 2015

306.4

305.8

Adjusted Consolidated EBITDA

593.4

606.5

(53.1)

(53.9)

Fleet depreciation IFRS

(140.4)

(139.7)

(63.7)

(62.9)

Fleet depreciation included in operating lease rents

(156.5)

(161.2)

(116.7)

(116.7)

Total Fleet depreciation

(296.9)

(300.8)

(13.7)

(16.8)

Interest expense related to fleet operating leases (estimated)

(36.1)

(42.5)

(17.1)

(18.0)

Net fleet financing expenses

(46.8)

(48.8)

(30.8)

(34.8)

Total Fleet financing

(83.0)

(91.3)

158.8

154.2

Adjusted Corporate EBITDA

213.6

214.4

(6.5)

(8.1)

Amortization, depreciation and impairment expense

(22.3)

(24.1)

17.1

18.0

Reversal of Net fleet financing expenses

46.8

48.8

13.7

16.8

Reversal of Interest expense related to fleet operating leases (estimated)

36.1

42.5

183.2

180.9

Adjusted recurring operating income

274.2

281.6

(13.7)

(16.8)

Interest expense related to fleet operating leases (estimated)

(36.1)

(42.5)

169.5

164.2

Recurring operating income

238.1

239.1

 

Appendix 4 – Balance sheet 

 

In € thousands

Sept. 30, 2016

Dec. 31, 2015

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Goodwill

456.892

457.072

 

Intangible assets

714.091

713.136

 

Property, plant and equipment

85.436

89.236

 

Equity-accounted investments

17.913

22.035

 

Other non-current financial assets

49.363

57.062

 

Deferred tax assets

65.879

55.730

 

Total non-current assets

1,389,574

1,394,271

 

 

 

 

 

Inventories

19.204

15.092

 

Rental fleet recorded on the balance sheet

2,009,642

1,664,930

 

Rental fleet related receivables

867.584

574.652

 

Trade and other receivables

396.534

357.200

 

Current financial assets

47.082

37.523

 

Current tax assets

37.412

33.441

 

Restricted cash

108.264

97.366

 

Cash and cash equivalents

202.756

146.075

 

Total current assets

3,688,478

2,926,280

 

 

 

 

 

Total assets

5,078,052

4,320,551

 

 

 

 

 

Equity

 

 

 

Share capital

143.409

143.155

 

Share premium

641.166

767.402

 

Reserves

-87.974

-74.341

 

Retained earnings (losses)

-92.424

-274.821

 

Total equity attributable to the owners of ECG

604.177

561.395

 

Non-controlling interests

653

962

 

Total equity

604.830

562.356

 

Liabilities

 

 

 

Financial liabilities

946.295

801.183

 

Non-current financial instruments

59.212

52.090

 

Employee benefit liabilities

123.724

119.295

 

Non-current provisions

25.003

25.168

 

Deferred tax liabilities

129.866

131.132

 

Other non-current liabilities

261

306

 

Total non-current liabilities

1,284,361

1,129,174

 

 

 

 

 

Current portion of financial liabilities

1,624,911

1,263,783

 

Employee benefits

23.520

2.944

 

Current provisions

231.160

250.087

 

Current tax liabilities

65.297

24.511

 

Rental fleet related payables

774.675

662.722

 

Trade payables and other liabilities

469.298

424.974

 

Total current liabilities

3,188,861

2,629,021

 

Total liabilities

4,473,222

3,758,195

 

 

 

 

 

Total equity and liabilities

5,078,052

4,320,551

 

Appendix 5 – IFRS Cash Flow

 

In € thousands

9 months 2016

9 months 2015

 

 

 

 

 

Profit/(loss) before tax

153.106

-16.381

 

Reversal of the following items

 

 

 

Depreciation and impairment charge on property, plant and equipment

10.925

10.694

 

Amortization and impairment charge on intangible assets

11.39

13.236

 

Changes in provisions and employee benefits

-15.575

22.546

 

Profit/(loss) on disposal of assets

-144

-397

 

Recognition of share-based payments

 

 

 

Costs related to the IPO

 

 

 

Total net interest costs

73.806

103.47

 

Redemption premium

 

56.01

 

Amortization of transaction costs                                                                          

5.54

36.894

 

Other non-cash items

1.051

617

 

Financing costs

80.397

196.991

 

 

 

 

 

Net cash from operation before changes in working capital

240.099

226.689

 

 

 

 

 

Changes in rental fleet recorded on the balance sheet

-404.206

-529.034

 

Changes in fleet working capital

-187.184

-88.046

 

Changes in non-fleet working capital

11.568

-5.412

 

Cash generated from operations

-579.822

-622.492

 

 

 

 

 

Income taxes received/paid

-15.793

-30.245

 

Net interest paid

-68.002

-108.35

 

 

 

 

 

Net cash generated from (used by) operating activities

-423.518

-534.398

 

 

 

 

 

Acquisition of intangible assets and property, plant and equipment

-24.892

-20.866

 

Proceeds from disposal of intangible assets and property, plant and equipment

2.628

6.079

 

Other investments and loans

 

 

Acquisition of financial assets

-3.249

-5.917

 

Acquisition of subsidiaries, net of cash acquired

-14.965

-9.163

 

 

 

 

 

Net cash used by investing activities

-40.478

-29.867

 

 

 

 

 

Capital increase (net of related expenses)

460.655

 

Issuance of bonds

130.542

474.517

 

Redemption of bonds

-780.010

 

(Purchases) / Sales of treasury shares net

-6.382

 

 

Changes in other borrowings

417.243

434.646

 

Payment of transaction costs

-2.507

-14.357

 

 

 

 

 

Net cash generated from (used by) financing activities

538.896

575.451

 

 

 

 

 

Cash and cash equivalent at beginning of period

229.368

206.317

 

Net increase/(decrease) in cash and cash equivalents after effect of foreign exchange differences

74.900

11.186

 

Effect of foreign exchange differences

-1.184

-621

 

Cash and cash equivalents at end of period

303.084

216.882

 

Appendix 6 – Debt 

 

€million

Pricing

Maturity

Sept. 30, 2016

Dec. 31, 2015

 

High Yield Senior Notes  (a)

5.75%

2022

600

475

Senior Revolving Facility (€350m)

E+250bps (b)

2020

0

81

FCT Junior Notes, accrued interest not yet due, capitalized financing costs and other

 

 

(207)

(150)

Gross Corporate debt  

 

393

406

Short-term Investments and Cash in operating and holding entities

 

(238)

(171)

CORPORATE NET DEBT

(A)

155

235

 

 

 

 

 

 

 

€million

Pricing

Maturity

Sept. 30, 2016

Dec. 31, 2015

IN Balance Sheet

High Yield EC Finance Notes (a)

5.125%

2021

350

350

Senior asset revolving facility (€1.3bn SARF) (c)

E+150bps

2020

980

658

FCT Junior Notes, accrued interest, financing capitalized costs and other

 

 

193

142

UK, Australia and other fleet financing facilities

 

Various (d)

646

509

Gross financial fleet debt

 

 

2,169

1,659

Cash held in fleet financing entities and Short-term fleet investments

(143)

(161)

Fleet net debt in Balance sheet

 

2,026

1,498

 

 

 

 

 

OFF BS

Debt equivalent of fleet operating leases – OFF Balance Sheet (e)

1,770

1,323

 

 

 

 

 

 

 

TOTAL FLEET NET DEBT  (incl. op leases)

(B)

3,796

2,821

 

 

 

 

 

TOTAL NET DEBT

(A)+(B)

3,951

3,057

a- These bonds are listed on the Luxembourg Stock Exchange. The corresponding prospectus  is available on Luxembourg Stock Exchange website (http://www.bourse.lu/Accueil.jsp

b- Depending on the leverage ratio

c- Swap instruments covering the SARF structure have been extended to 2020

d- UK fleet financing maturing in 2018 with a one-year extension option

e- Corresponds to the net book value of applicable vehicles, which is calculated on the basis of the purchase price and depreciation rates of corresponding vehicles (based on contracts with manufacturers).

 

[1] Or 4.5% on an organic basis, ie at constant currency and excluding Locaroise fully consolidated since July 2016.

[2]Based on last twelve months Adjusted Corporate EBITDA

[3] At constant currency and perimeter, excluding petrol impact

[4] Subject to the approval of the General Assembly

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