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07/25

Europcar announces resilient 2016 half year results

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 July 22, 2016

 

Europcar announces resilient 2016 half year results

 

  • Rental revenue increased by 1%, at constant exchange rate despite adverse effects.
  • Adjusted Corporate EBITDA at €55 million demonstrating continuing investments notably in InterRent and digital transformation.
  • Strong cash generation with corporate free cash flow amounting to €82 million.
  • Net Profit at + €3 million versus a loss of €157 million in the 2015 first semester.
  • Successful issuance of a €125 million bond issuance to support the active on-going acquisition program.
  • Full year 2016 revised guidance in a context of weakened economic and operating environment following notably Brexit and European terrorist attacks.
  • A new organization project to accelerate the deployment of its go to market strategy.

 

Saint-Quentin-en-Yvelines, 25 July, 2016 – Europcar (Euronext Paris: EUCAR) announces today its results for the first half of 2016.

 

Philippe Germond, Chairman of the Management Board stated “The first semester 2016 confirmed the resilience of our model. On the revenues side, Europcar demonstrated a sound growth at constant exchange rate, despite an adverse environment, notably impacted by European terrorist attacks, social movements in France, weaker trading environment, bad weather conditions in northern European countries, and finally Brexit. In the meantime, Europcar continued to accelerate its development with the successful acquisition of Locaroise and Bluemove. We pursued also the roll out of the InterRent brand and network. On a strategic stand point, the company intends to set up a new organization structured around 5 Business Units, more customer and market centric that will ensure sustainable growth and enable us to seize new business opportunities. In the weak current market conditions, Europcar has decided to issue a new 2016 guidance, presenting a positive evolution in both top line and Adjusted Corporate EBITDA compared to last year. The whole management team is fully confident in the strength and resilience of our business model and our ability to fulfil our ambition to be the preferred partner for every individual mobility need”.  

 

In € million, except if mentioned

H1 2016

H1 2015

Change

Change at constant exchange rate

Number of rental days (millions)

26.7

26.0

3,0%

 

Average fleet (thousands)

194.7

191.0

+1.9%

 

Total revenues

948

961

-1,3%

+0.5%

Rental revenues

883

891

-0,9%

+0,9%

Adjusted Corporate EBITDA

55

60

-9.0%

-7.5%

Adjusted Corporate EBITDA margin

5.8%

6.3%

-0.5pt

 

Last Twelve Months Adjusted Corporate EBITDA

245

231

5.9%

 

Last Twelve Months Adjusted Corporate EBITDA  Margin

11.5%

11.2%

0.3pt

 

Operating income

72

19

 

 

Net profit/loss

3

(157)

 

 

Corporate free cash flow

82

24

 

 

Corporate net debt at the end of the period

200

 

 

 

 

 

Revenues

 

Total revenue amounted to €948 million compared to €961million in 2015 first semester, representing an increase of +0.5% at constant currency. This increase is mainly driven by a +0.9% growth in rental revenue (€883 million) partly off-set by the decrease of petrol price. Significant headwinds and numerous challenges (bad weather conditions in northern European countries, European terrorist attacks and finally doubts on the way out of the Brexit referendum) combined with a softer commercial momentum explain this performance.

 

Rental days volume increased by 3% compared to S1 2015, at 26.7 million. The leisure segment showed a positive evolution over S1 on both Europcar® and InterRent® brands, notably in the European Southern countries. Compared to the first semester 2015, the trend was less favourable on the corporate side, notably in the United-Kingdom prior to the Brexit Referendum (especially on the car replacement segments), and to a lesser extent on the Belgium perimeter as consequences of the terrorist attacks.

 

On a consolidated basis, the RPD decreased by 2% at constant currency impacted by the success of InterRent in a context of a general tough commercial environment for the Group. Europcar brand RPD was slightly down by -0.5%, while the low cost brand InterRent decreased by 1.8% supporting its volume model.

 

Over the first semester 2016, the Group entered into a new dynamic regarding its customer journey strategy, with the deployment of two structuring programs aimed at creating brand preference and differentiation with:

 

  • A “Customer First Program” which targets to deliver an enhanced experience to each Group customer based on a comprehensive program that will provide a higher level of service.

 

  • Key airport project, the main objectives of which are to substantially improve and differentiate the customer journey at the Group key airport locations. The project includes notably the management of the peak periods and queues, the forecast of the fleet and the staff and the processes to improve the customer service delivery.

 

The Group also signed partnerships with Air Caraïbes and Gulf Air’s FalconFlyer Loyalty Program, allowing the company to develop its customer portfolio while enhancing its brand awareness.

 

 

Adjusted Corporate EBITDA

 

Adjusted Corporate EBITDA reached + €55 million versus + €60 million in S1 2015 reflecting the Group investments strategy to sustain future growth while leveraging on its strong operational excellence. In particular, the Group pursued its fast deployment of InterRent brand and network (opening of the 150th station in June 2016 in Sardinia[1]), its investments in its customer journey programs (CRM, airport project…), IT and Europcar Lab’s investments. In addition, Europcar has continued to manage its fixed and variable costs basis ahead of the summer season.

 

 

Operating income

 

Operating income came in at €72 million, compared to €19 million in S1 2015.

Last year semester included IPO costs, non-recurring items which were notably the net negative impact of certain proceedings and reorganization charges linked to Fast Lane transformation plan roll out.

 

 

Net Profit/Loss

 

Net profit amounted to €3 million in the first semester of 2016, compared to a loss of €157 million in the first semester of 2015. This improvement reflects the full benefit of the reshape of the capital structure following the IPO (approximately €92 million)  at the end of Q2 2015, while  last year first semester was also impacted by other non-recurring items (including mainly the net negative impact of certain proceedings (approximately €27 million) and reorganization charges linked to Fast Lane transformation plan roll out (€20 million)).

 

 

Corporate free cash flow and Corporate Net Debt

 

Corporate free cash flow amounted to €82 million compared to €24 million last year, representing an increase of €58 million versus last year. This Corporate free cash flow encompassed Adjusted Corporate EBITDA of €55 million and a good management of non-fleet working capital over the period. As a reminder, 2015 first semester free cash flow was also impacted by one-off cash out.

 

The Group is strongly focused on cash generation, providing the headroom to roll out its ambitious acquisition plan while enabling the execution of its share buy-back program.

 

To support its dynamic acquisition plan, the Group took the opportunity to tap its corporate bond at very favorable conditions. On June 2, the Group successfully issued a new tranche on its € 475 million corporate bond due 2022 for €125 million. This was priced at 4.8790 % yield to maturity representing a 100 bps improvement compared to original yield to maturity.  

 

Corporate net debt amounted to €200 million as of June 30, 2016 (vs. €235 million as of December 31, 2015). The corporate net debt leverage is at 0.8x[2].

 

 

Acquisition plan

 

The Group pursued its acquisition plan with, in May, the acquisition of Locaroise, its third French Franchisee, in June, Bluemove a mobility tech start-up and car sharing leader in Spain, through Ubeeqo, and recently, a minority investment in Wanderio, a multi modal search and comparison platform.

 

Furthermore, Ubeeqo pursued the deployment of its multi modal platform offering a seamless book and pay experience to customers and is now present in 5 European countries – France, UK, Belgium, Germany and Spain (with  Bluemove).

 

 

A new organization to accelerate the Group’s development 

 

The Group is evolving in fast moving markets with new consumer mobility needs. In order to strengthen its competitiveness and agility and to accelerate its development, the Group wants to better leverage its customer centric vision allowing sustainable growth. Hence, the Management Board is entering into a project to adapt the Group’s organization with the set-up of 5 Business Units reflecting the Group go to market strategy and a strong focus on the growth of each of its core business activities while developing new business opportunities.

  • BU Cars
  • BU Vans & Trucks
  • BU Low Cost
  • BU Mobility
  • BU International coverage

 

Sustaining profitable growth and strengthening its leadership position in the new mobility solutions market are at the heart of the Europcar Group short, medium and long-term goals, with one ambition: to be the preferred partner for every individual mobility need.

 

Revised 2016 FY guidance

 

In the context of weakened economic and operating environment following notably Brexit, European terrorist attacks, and softer commercial momentum, the Group is fully leveraging its resilient and low risk business model while increasing its focus on go to market and continuing investment for future growth.

 

The company will deliver the following revised guidance:

  • Slight increase of revenue on an organic basis[3]
  • Adjusted Corporate EBITDA[4] above last year €251million
  • Adjusted Corporate EBITDA conversion to Corporate free cash flow above 50%.
  • Dividend payout ratio at least 30% of Net Income[5]

 

In addition, the Group will continue to roll out of its ambitious acquisition plan while managing opportunistic execution of its Share Buy back program.   

 

 

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 are not guarantees of future performance and the announced objectives 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 affect announced objectives. 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. Europcar Groupe undertakes no obligation to publicly 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 identified in the “Risk factors” of the Registration Document registered by the Autorité des marchés financiers (the “AMF”) May 20, 2015 under the  number I.15-041 and its update filed with the AMF on June 12, 2015 and also available on the Group’s website: www.europcar-group.com 

 

Further details on our website:

 finance.europcar-group.com

 

Contacts

 

Europcar / Press relations

Nathalie Poujol

+33 1 30 44 98 82

europcarpressoffice@europcar.com

 

Europcar / Investor relations

Aurélia Cheval

+33 1 30 44 98 98

Investor.relations@europcar.com

 

Havas Paris

Jean-Baptiste Froville

+33 1 58 47 95 39 

jean-baptiste.froville@havasww.com

 

 

 

[1] Including corporate and franchisees countries

[2]Based on last twelve months Adjusted Corporate EBITDA

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

[4] Based on a 1.20 £/€ exchange rate for H2 2016. The previous guidance provided was based on a 1.42 £/€ exchange rate for the full year 2016

[5]To be paid from 2017 based on 2016

 

 

 

Appendix 1 – Management Profit and Loss

Q2 2016 Q2 2015 All data in €m H1 2016 H1 2015
530,4 546,8 Total revenue 947,9 960,5
-121,2 -123,1 Fleet holding costs, excluding estimated interest included in operating leases -226,1 -229,1
-181,6 -188,4 Fleet operating, rental and revenue related costs -336,9 -339,5
-86,4 -88,3 Personnel costs -169,6 -169,2
-57,6 -54,8 Network and head office overhead -111,0 -108,1
2,6 1,4 Other income and expense 2,5 2,1
-141,4 -141,7 Personnel costs, network and head office overhead, IT and other -278,1 -275,2
-15,1 -15,5 Net fleet financing expense -29,8 -30,8
-11,8 -14,1 Estimated interest included in operating leases -22,4 -25,7
-26,9 -29,6 Fleet financing expenses, including estimated interest included in operating leases -52,2 -56,5
59,4 63,9 Adjusted Corporate EBITDA 54,7 60,2
11,2% 11,7% Margin 5,8% 6,3%
-7,7 -8,0 Depreciation – excluding vehicle fleet -15,9 -16,0
-1,4 -23,2 Other operating income and expenses 3,3 -55,9
-12,7 -111,1 Other financing income and expense not related to the fleet -25,3 -139,3
37,6 -78,5 Profit/loss before tax 16,8 -151,0
-14,7 -6,7 Income tax -11,0 -1,7
0,1 -2,2 Share of profit/(loss) of associates -2,9 -4,1
22,9 -87,3 Net profit/(loss) 2,8 -156,8

Appendix 2 – IFRS Income Statement

Q2 2016 Q2 2015 All data in €m H1 2016 H1 2015
530,4 546,8 Total revenue 947,9 960,5
-133,0 -137,2 Fleet holding costs -248,5 -254,8
-181,6 -188,4 Fleet operating, rental and revenue related costs -336,9 -339,5
-86,4 -88,3 Personnel costs -169,6 -169,2
-57,6 -54,8 Network and head office overhead -111,0 -108,1
2,6 1,4 Other income and expense 2,5 2,1
-7,7 -8,0 Depreciation – excluding vehicle fleet -15,9 -16,0
66,8 71,5 Recurring operating income 68,5 75,0
-1,4 -23,2 Other non-recurring income and expenses 3,3 -55,9
65,4 48,3 Operating income 71,8 19,1
-27,8 -126,6 Net financing costs -55,1 -170,1
37,6 -78,5 Profit/(loss) before tax 16,8 -151,0
-14,7 -6,7 Income tax -11,0 -1,7
0,1 -2,2 Share of profit/(loss) of associates -2,9 -4,1
22,9 -87,3 Net profit/(loss) 2,8 -156,8
22,9 -87,3 Net profit/(loss) attributable to Europcar owners 2,9 -156,8

Appendix 3 –  Reconciliation

T2 2016 T2 2015 En millions d’euros S1 2016 S1 2015
183,7 193,4 EBITDA consolidé ajusté 287,0 300,8
-46,1 -44,9 Dépréciation de la flotte (IFRS) -87,3 -85,8
-51,3 -54,9 Dépréciation de la flotte incluse dans les contrats de location simple -92,8 -98,3
-97,4 -99,8 Dépréciation de la flotte totale -180,1 -184,1
-11,8 -14,1 Intérêts estimés inclus dans les loyers de locations simples -22,4 -25,7
-15,1 -15,5 Charges financières relatives à la flotte -29,8 -30,8
-26,9 -29,6 Charges financières relatives à la flotte, y compris intérêts estimés inclus dans les locations simples -52,2 -56,5
59,4 63,9  EBITDA Corporate Ajusté 54,7 60,2
-7,7 -8 Dotations aux amortissements  -15,9 -16,0
15,1 15,5 Extourne des charges financières relatives à la flotte  29,8 30,8
11,8 14,1 Extourne des intérêts estimés inclus dans les loyers de locations simples 22,4 25,7
78,6 85,5 Résultat opérationnel courant ajusté 91,0 100,6
-11,8 -14,1 Intérêts estimés inclus dans les loyers de locations simples -22,4 -25,7
66,8 71,4 Résultat opérationnel courant 68,6 74,9

Appendix 4 – Balance Sheet

In € thousands   June 30, 2016 Dec. 31, 2015
       
Assets Notes    
       
Goodwill 9 450,035 457,072
Intangible assets   713,128 713,136
Property, plant and equipment   83,783 89,236
Equity-accounted investments   19,131 22,035
Other non-current financial assets 10 49,813 57,062
Deferred tax assets   63,749 55,73
Total non-current assets   1,379,639 1,394,271
       
Inventories   18,555 15,092
Rental fleet recorded on the balance sheet 11 2,072,584 1,664,930
Rental fleet related receivables 12 716,627 574,652
Trade and other receivables 13 379,766 357,2
Current financial assets 10 41,464 37,523
Current tax assets   26,08 33,441
Restricted cash 14 111,811 97,366
Cash and cash equivalents 14 167,037 146,075
Total current assets   3,533,924 2,926,280
       
Total assets   4,913,563 4,320,551
       
Equity      
Share capital 15 143,409 143,155
Share premium  15 767,147 767,402
Reserves   -111,36 -74,341
Retained earnings (losses)   -282,976 -274,821
Total equity attributable to the owners of ECG   516,22 561,395
Non-controlling interests   685 962
Total equity   516,905 562,356
Liabilities      
Financial liabilities 16 932,073 801,183
Non-current financial instruments   67,052 52,09
Employee benefit liabilities   123,356 119,295
Non-current provisions 17 20,257 25,168
Deferred tax liabilities   130,078 131,132
Other non-current liabilities   276 306
Total non-current liabilities   1,273,092 1,129,174
       
Current portion of financial liabilities 16 1,375,920 1,263,783
Employee benefits   16,661 2,944
Current tax liabilities   30,468 24,511
Rental fleet related payables   962,508 662,722
Trade payables and other liabilities    520,743 424,974
Current provisions 17 217,266 250,087
Total current liabilities   3,123,566 2,629,021
Total liabilities   4,396,658 3,758,195
       
Total equity and liabilities   4,913,563 4,320,551

Appendix 5 – Management Cashflow

All data in €m H1 2016 H1 2015
Adjusted Corporate EBITDA  55 60
Non-recurring expenses 3 -25
Non-fleet capital expenditure (net of proceeds from disposals)  -13 -12
Changes in non-fleet working capital and provisions 37 22
Income tax paid  0 -21
Corporate  free cash flow  82 24
Cash interest paid on corporate High Yield bonds -13 -51
Cash flow before change in fleet asset base, financing and other investing activities 69 -27
Other investing activities -1 -9
Change in fleet asset base, net of drawings on fleet financing and working capital facilities -150 -142
Capital increase 0 464
Change in Corporate High Yield  131 -252
Change in RCF excl. Junior notes impact 0 0
Transaction cost cash out and swap impact -3 -69
Net change in cash before FX effect  46 -35
Cash and cash equivalents at beginning of period 229 206
Effect of foreign exchange conversions -1 2
Cash and cash equivalents at end of period 274 174

Appendix 6 – IFRS Cashflow

In € thousands   June 30, 2016 Dec. 31, 2015
       
Assets Notes    
       
Goodwill 9 450,035 457,072
Intangible assets   713,128 713,136
Property, plant and equipment   83,783 89,236
Equity-accounted investments   19,131 22,035
Other non-current financial assets 10 49,813 57,062
Deferred tax assets   63,749 55,73
Total non-current assets   1,379,639 1,394,271
       
Inventories   18,555 15,092
Rental fleet recorded on the balance sheet 11 2,072,584 1,664,930
Rental fleet related receivables 12 716,627 574,652
Trade and other receivables 13 379,766 357,2
Current financial assets 10 41,464 37,523
Current tax assets   26,08 33,441
Restricted cash 14 111,811 97,366
Cash and cash equivalents 14 167,037 146,075
Total current assets   3,533,924 2,926,280
       
Total assets   4,913,563 4,320,551
       
Equity      
Share capital 15 143,409 143,155
Share premium  15 767,147 767,402
Reserves   -111,36 -74,341
Retained earnings (losses)   -282,976 -274,821
Total equity attributable to the owners of ECG   516,22 561,395
Non-controlling interests   685 962
Total equity   516,905 562,356
Liabilities      
Financial liabilities 16 932,073 801,183
Non-current financial instruments   67,052 52,09
Employee benefit liabilities   123,356 119,295
Non-current provisions 17 20,257 25,168
Deferred tax liabilities   130,078 131,132
Other non-current liabilities   276 306
Total non-current liabilities   1,273,092 1,129,174
       
Current portion of financial liabilities 16 1,375,920 1,263,783
Employee benefits   16,661 2,944
Current tax liabilities   30,468 24,511
Rental fleet related payables   962,508 662,722
Trade payables and other liabilities    520,743 424,974
Current provisions 17 217,266 250,087
Total current liabilities   3,123,566 2,629,021
Total liabilities   4,396,658 3,758,195
       
Total equity and liabilities   4,913,563 4,320,551

Appendix 7 – Debt

 

€million

Pricing

Maturity

June 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

 

 

-189

-150

Gross Corporate debt  

 

411

406

Short-term Investments and Cash in operating and holding entities

 

-211

-171

CORPORATE NET DEBT

(A)

200

235

 

 

 

 

 

 

 

€million

Pricing

Maturity

June 30, 2016

Dec. 31, 2015

IN Balance Sheet

High Yield EC Finance Notes (a)

5.125%

2021

350

350

Senior asset revolving facility (€1.1bn SARF) (c)

E+170bps

2019

859

658

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

 

 

174

142

UK, Australia and other fleet financing facilities

 

(d)

509

509

Gross financial fleet debt

 

 

1,892

1,659

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

-148

-161

Fleet net debt in Balance sheet

 

1,744

1,498

 

 

 

 

 

OFF BS

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

1,811

1,323

 

 

 

 

 

 

 

TOTAL FLEET NET DEBT  (incl. op leases)

(B)

3,555

2,821

 

 

 

 

 

TOTAL NET DEBT

(A)+(B)

3,755

3,057

 

 

 

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