15.08.2016

Herc starts in the red

US based Herc Rentals – the new name for independent Hertz Equipment Rental – has reported a weak second quarter.

Total revenues for the first six months were 9.5 percent lower at $746 million , almost half the drop was due to the disposal of France and Spain, while the rest was down to the slowdown in the oil & gas market. Last year’s pre-tax profit was converted to a $4.2 million loss this year, thanks to higher interest charges and costs associated with the spin off from Hertz car rental.

In the second quarter revenues declined 10 percent to $380.4 million, with a pre-tax loss of $2.7 million compared to a profit last year of $19.6 million. Capital expenditure in the first half was $305 million, and rental rates improved half a percent.

Chief executive Larry Silber said: “We continued to execute our long term strategy to diversify our fleet and broaden our customer mix while successfully accomplishing our separation from the Hertz car rental business on June 30th. In our key markets, which represented 84 percent of our business in the second quarter, rental revenue improved 8.1 percent over the prior year. In addition, we are making good progress on our growth initiatives. Our ProSolutions services, which focus on providing customised solutions using specialty equipment such as climate control, pump and power generation gear, are gaining momentum with customers. Also, we increased pricing on a worldwide basis, achieving a 0.5 percent increase in the quarter year-over-year”.

“While we are encouraged by these positive developments, we are managing through continuing weak upstream oil and gas markets and lower than projected volume in the second half. Despite these headwinds, we remain confident that our initiatives are creating a strong foundation for our continuing transformation and positioning us well for the long term,”

“In the last twelve months we introduced new sales and incentive programs and new productivity and pricing tools, and began adding ProSolutions and ProContractor equipment to our fleet. We expect that these initiatives will continue to gain momentum over time. We will remain focused on our strategic initiatives to improve our fleet and customer mix in order to drive sales growth and improve dollar utilisation going forward.”

Vertikal Comment

This is not a great result, but if you take off some of the one off issues, they are not too bad at all. The Company has much to do if wants to get the company moving again, The ingredients are all there so it simply needs some strong momentum and solid customer service and it should start to come right. In the meantime there is much to be done.