Avis Budget’s Income Drops on Acquisition Costs, Weak Pricing
Company reports net losses for fourth quarter and full-year 2011 on costs related to its purchase of Avis Europe, as well as a decline in pricing in North America.
Avis Budget Group Inc. reported total revenue in 2011 of $5.9 billion, a 14% increase from 2010. Excluding revenue from Avis Europe, which it bought on Oct. 3, full-year revenue increased 7% driven by a 6% increase in volume, partially offset by a 1% decrease in pricing.
Reported pretax income of $36 million was impacted by acquisition-related charges, for a net loss for 2011 of $29 million, compared with a net profit of $54 million in 2010.
In the fourth quarter, revenue rose 33% to $1.63 billion, from $1.23 billion in the fourth-quarter of 2010. Excluding revenue from Avis Europe, the company's revenue grew 4% in the fourth quarter. However, the company reported a $170 million net loss in the quarter, compared with a loss of $24 million a year earlier.
In North America, revenue increased 3% primarily due to a 5% increase in volume, partially offset by a 3% year-over-year decline in pricing. Adjusted pre-tax income declined $5 million, primarily related to a $15 million increase in marketing spending, partially offset by a 5% decline in per-unit fleet costs.
For the newly acquired Avis Europe operations, revenue declined 2% in fourth quarter 2011 compared to fourth quarter 2010 due to a 3% decline in rental days, partially offset by a slight increase in pricing.
Though the company generally does not give financial guidance, Avis Budget said it expects its North America fleet costs will increase 15-20% on a per-unit basis in 2012, as residual values have generally stabilized at levels experienced prior to the earthquake in Japan in first quarter 2011.
Further, the company expects that no single manufacturer will account for more than approximately 25% of its 2012 global rental car fleet, and that vehicles obtained under manufacturer repurchase programs will continue to represent approximately half of its average North American car rental fleet and approximately 70% of its international car rental fleet.
In its quarterly conference call, the company said it had increased prices in its leisure segment in mid-February and would institute another price increase in early March.
For the full press release, click here.
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