During the first quarter of 2018, the Europcar Group delivered evenue growth of 28% as a result of solid momentum within its recently acquired companies, and also within its historical perimeter. The company’s organic revenue reached 3.9% in the first quarter of the year, mainly driven by the leisure and low cost segments.
The Group achieved significant progress in the execution of its transformation strategy and delivered results in several key areas. First, it's on track in terms of managing the integration of recent acquisitions and delivering the expected synergies. Europcar Group has continued to improve its net promoter score, which reached a new high in the first quarter. Lastly, the Group continued to make significant progress in the further digitalization of its customer experience and services through the completion of the roll out of a new CRM platform.
Europcar Group has also taken action and delivered encouraging initial results in the U.K.
The adjusted Corporate earnings before interest, taxes, depreciation, and amortization (EBITDA) was impacted by the integration of Goldcar, which significantly increased the seasonality of the Group’s profitability generation; a negative mix effect generated by the strong growth of the low cost and the vans and trucks business units; and an increase in its digital transformational costs.
Nevertheless, Europcar's Q1 results are fully in line with its expectations at this stage and were factored in its 2018 outlook.
Q1 2018 Highlights
The Group generated revenues of 556 million euros ($655.8 million) in the first quarter of 2018, up 28% at constant exchange rates compared with the first quarter of 2017. On an organic basis, the Group revenues grew by 3.9%.
This significant increase in Europcar's revenues was supported by the recent acquisitions made by the Group in the last months of 2017. As a result, the Group delivered solid growth across all of its major business units with cars growing by 16%, vans and trucks growing by 62% and low cost growing by 279%.
On an organic basis, Europcar's three major business units of cars, vans and trucks, and low cost grew by respectively 3.5%, 8%, and 18%, showing that an increased focus on the vans and trucks and low cost segments is a significant generator of additional revenue growth for the Europcar Group.
As is traditionally the case during the first quarter of the year which represents a low point in the touristic season, revenues were more evenly split between the Group’s corporate customers and its leisure customers, representing each an even 50% of Group revenues.
The number of rental days increased to 17.1 million in Q1 2018, up 33% versus Q1 2017 with an organic growth of 4.6%. This growth in rental days was spread across all the key divisions with cars growing 15%, vans and trucks growing 50%, and low cost growing 207%.
Revenue per rental day (RPD) decreased by 1.4% at Group level, mostly impacted by the recent acquisitions. On an organic basis, RPD was steady in Q1 2018 versus last year as a result of stable pricing environment in cars during the quarter with RPD up 0.3%, a 4.4% decline in the vans and trucks business unit which continues to reflect the Group’s strategic focus on expanding its corporate business, and a positive 9.9% increase in RPD in low cost reflecting a good ancillary product sales momentum.
Adjusted Corporate EBITDA
Excluding the impact of New Mobility, Q1 2018 Adjusted Corporate EBITDA declined significantly to -21.4 million euros (-$25.24 million) compared to -6.3 million euros (-$7.43) in Q1 2017 at constant exchange rate.
This decrease has three major causes:
- The negative impact of the Goldcar acquisition, which as expected adds more seasonality to the Group’s overall profitability generation
- The negative mix impact generated by the strong organic growth of our existing low cost and vans and trucks business units
- The increase in our digital & IT spending which is key to the success of the Group’s transformation.
It is important to note that this decline in Adjusted Corporate EBITDA was expected and is fully factored within the Group’s expectations for FY 2018.
In Q1 2018, the Group posted a net profit of 2.5 million euros ($2.95 million), compared to a net profit of 18.6 million euros ($21.94 million) in Q1 2017. This decline was caused by a lower level of adjusted Corporate EBITDA, a higher level of non-fleet D&A, and an increase in interest costs on corporate bonds as a result of the financing of the Goldcar acquisition.
Sale of 25% stake in car2go
On February 28, the Europcar Group signed an agreement with Daimler Mobility Services on the sale of its 25% stake in car2go Europe GmbH. The completion of the sale generated a pre-tax gain of 68 million euros ($80.2 million) which has been accounted for in the company’s Q1 results.