12.11.2015

Mixed quarter for Hertz

Hertz Equipment Rentals saw a decline in revenues and profits during the third quarter as Oil & Gas revenues dropped sharply.

Total revenues for the first nine months were $marginally down on last year at $1.13 billion, compared to $1.15 billion in the same quarter last year. Pre-tax profits were more than halved, from $140 million last year to just 69 million this year.

Looking at the third quarter revenues slipped three percent, to $401 million, partially due to exchange rate shifts, as well as lower activity in the Oil & Gas sector. Rates were flat, as was physical utilisation at 66 percent. Pre-tax profits fell 32 percent to $54 million.

Hertz group chief executive John Tague said: "Our profit improvement in the third quarter is early evidence of the potential we see in our performance improvement plan. Our fleet efficiency, which measures our ability to match capacity with demand, rose to record levels. In addition, we successfully completed the integration of the Dollar Thrifty operations during a quarter in which we increased customer satisfaction across all of our rental car brands around the world. I want to thank our employees for helping to make this a successful quarter”.

"Meanwhile, we remained on track to achieve our cost reduction goals and made progress on strategic initiatives, including preparations to separate Hertz Equipment Rental as a stand-alone company and returning value to shareholders through the initial steps of our share repurchase programme."

“Worldwide Equipment Rental revenues for the third quarter were favourably impacted by a three percent increase in worldwide equipment rental volumes, driven by new account growth, which is predominantly derived from small local contractors and speciality segments as the company diversifies its business. Pricing for the third quarter was flat year-over-year”.

“Revenues were negatively affected by continuing weak performance in stores serving upstream oil and gas markets during the quarter. In North America, for example, revenue in these upstream oil and gas markets year-over-year on a constant currency basis decreased 26 percent, while non-oil and gas markets revenue increased 14 percent. In response to the continued weakness in oil and gas markets, we reduced the equipment fleet in this segment by 16 percent in the third quarter”.

Vertikal Comment

These numbers are somewhat lacklustre, but could have been worse, the rest of this year will include distractions related to the separation of the company from the car rental operation. In October it sold off its French and Spanish operations to Loxam helping simplify things a little. Hertz Equipment is likely to have a rocky ride ahead, as it finds its place as a separate business.

This could really help it find a new lease of life, but equally if it gets off to a poor start or is acquired by the wrong type of owner could face a bleak or non-descript future. Exciting and interesting times either way. Moves such as this always throw up opportunities, let’s hope that they fall well for those working within the company.