Europcar Mobility Group announced its results for the first half (H1) of 2018.

“We have made significant progress on the execution of our strategy during the first half of 2018 confirming our organization into business units and the relevance of the acquisitions made in 2017," Caroline Parot, chief executive officer of Europcar Mobility Group, said in a statement. "This is highlighted by a good set of operational and financial results with solid performances across our three major business units, which puts us well on track to deliver our 2018 financial objectives."

First Half 2018 Operational Highlights

The Group’s leisure business, responsible for 56% of Group rental revenue in the first half of 2018, but also the Group’s corporate business, acted as a dual growth engine for the Group and its major business units. The cars business unit experienced good momentum from both its corporate and leisure customer bases. The vans and trucks business unit continued to see strong growth and demand from its corporate customer base which shows that the Group’s supersite implementation strategy and focus on SMEs is bearing fruit. Finally, the Low Cost business unit led by Goldcar and InterRent delivered good growth in the first half of 2018.

The Group continued to focus on improving its customer service through some dedicated programmes. These efforts have enabled the Group to continue to deliver significant improvements in its net promoter scores with an increase of 3.2 pointsduring the last twelve months. Group NPS reached 57.2 points in June 2018 compared to 54.0 points in June 2017.  

In the first half of 2018, the Group has continued to make progress on two of its key operating metrics: fleet utilization and fleet cost per unit. The Group delivered a good performance in terms of fleet financial utilization with a decline on a reported basis in the first half of 2018 but a 10 basis points increase to 76.4% versus 76.3% when excluding for the impact of Buchbinder and Europcar Denmark which are more off airport set ups.

The Group also continued to show some good control of the fleet cost per unit per month which was down 2 euros ($2.33) in the first half of 2018 at 236 euros ($275) versus 238 euros ($277) in the first half of 2017 thanks to a decrease in fleet operating costs and coupled with positive impact of recent acquisitions.

On May 17, Europcar changed its corporate name to Europcar Mobility Group in order to better reflect the transformation of the Group from a traditional car rental company to a global provider of mobility services, using the strength of its historical business whilst responding to identified market needs.

Under one all-encompassing umbrella brand name, the Europcar Mobility Group is now able to offer a wide and complementary range of brands and mobility solutions.

First Half 2018 Highlights per Business Unit

Cars

The Group delivered a good 3.2% growth in rental revenue in the first half of 2018 with positive RPD trends on a proforma basis. This was the result of good growth trends in both corporate and leisure segments. Southern European countries continued to deliver the strongest growth levels within the Group. The UK continued its turnaround which as expected involved a lower revenue trend but more focus on profitable growth and as a result an increase in profitability. Going forward, the Cars division will be increasingly focused on delivering more profitable growth and will drive the implementation of several country headquarter cost and network cost optimisation programs.   

Vans & Trucks

The Group’s strategy to focus on corporate/SME customers through longer duration of rentals, the deployment of supersites in France, Germany, the U.K., and more recently in Spain is delivering solid revenue growth. The integration of Buchbinder’s Vans & Trucks business has acted as a significant boost to the Group’s Vans & Trucks business in Germany. The Vans & Trucks business unit delivered a strong 14% increase on a proforma basis (54% reported) in rental revenue in the first half of 2018. 

Low Cost           

The Group’s Low Cost business unit is now operating with two brands, Goldcar and InterRent, following the integration of InterRent and Goldcar within the Low Cost business unit. Goldcar’s Management is now in charge of this business unit and the operational transfer of both people and IT systems occurred in the U.K. and Portugal in June and will be followed by Spain, France and Italy in Q4. The business unit delivered a solid 6.9% growth in rental revenue in H1 2018 on a proforma basis with positive RPD trends.

New Mobility

The New Mobility business unit showed strong momentum in all its countries and cities with 86% revenue growth in car sharing and 52% growth in ride hailing. The Group’s two major brands are Ubeeqo (car sharing) and Brunel (ride hailing). The former is well positioned and perceived by customers as an attractive alternative to car ownership in cities and the latter has delivered good commercial traction with the win of several new key corporate customer accounts in London.

The New Mobility business unit has clearly benefited as it has been more integrated within the Europcar Mobility Group and extracted plenty of synergies, ranging from reduction in fleet holding costs, financing costs and improved in-fleeting capacity, as well as joint-sales and cross-selling momentum. 

Finally, the Group also acquired Scooty, a scooter-sharing business in Belgium.  

First Half 2018 Financial Highlights

Revenue

In the first half of 2018, Europcar Mobility Group generated revenues of 1,297 million euros ($1.512 million) up 28% at constant exchange rates compared with the first half of 2017. On an organic basis, ie at constant exchange rates, constant perimeter, the Group revenues grew by 3.4%.

This significant increase in Group revenues was the result of positive growth across all the Group’s key markets and in all of its three major business units with Cars growing by 12.8%, Vans & Trucks growing by 55% and Low Cost growing by an impressive 251%. On an organic basis, these three major business units grew by respectively 2.6%, 6.3% and 6.1%.

The number of rental days reached a new record of almost 40 million in the first half of 2018, up 32% versus the first half of 2017. On a proforma basis, growth in rental days was 4.5% for the Group spread across all its key divisions.

Revenue per rental day (RPD) increased on a proforma basis by 0.5% at Group level, resulting from a positive impact in Cars and Low Cost and a decline in Vans & Trucks pursuing its mid-term development strategy.

Adjusted Corporate EBITDA

First half 2018 Adjusted Corporate Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) decreased by 17% at constant exchange rates to 46 million euros ($53 million) compared to 56 million euros ($65 million) in the first half of 2017 after a strong Q2 showing a Corporate EBITDA of 71 million euros ($82 million), up 14% year over year. As expected, the Adjusted Corporate EBITDA margin of the Group is lower by 190 basis points to 3.6% in the first half of 2018 as a result of an increase in both network costs and HQ structure costs following the recent acquisitions made by the Group (Goldcar, Buchbinder, and Europcar Denmark).

Excluding the impact of new mobility, first half 2018 Adjusted Corporate EBITDA reached 53 million euros ($61 million) compared to 60 million euros ($69 million) in the first half 2017 at constant exchange rate.

This decline reflects the reinforced seasonality of the Group affecting the overall profitability generation following its purchase of Goldcar. These elements and its translation in the group performance were expected and are fully factored within the Group’s expectations for FY 2018.

Corporate Operating Free Cash Flow

First Half 2018 Corporate Operating Free Cash Flow reached 65 million euros ($75 million) compared to 88 million euros ($102 million) in the first half of 2017. The main reasons for that decrease were the lower Adjusted Corporate EBITDA and a higher level of non-fleet related capital expenditure mostly IT related. The change in Group non fleet working capital was in line with last year’s performance after the catch up of a technical timing delay in Q1 as expected.  

Operating income

First Half 2018 operating income came in at 104.9 million euros ($122.3 million) compared to 31.8 million euros ($37.07 million) in the first half of 2017 mostly due to non-recurring items (sale of company’s 25% stake in Car2go).

Net financing costs

Net financing costs under IFRS amounted to a 77.6 million euros ($90.47 million) net expense in the first half of 2018, up 34% compared to a net expense of 58 million euros ($67 million) incurred in the first half of 2017. The main reason for this is the full effect of the 600 million euros ($699 million) corporate bond issued in October 2017 to finance the Goldcar and Buchbinder acquisitions.  

Net income

In the first half of 2018, the Group posted a net profit of 20 million euros ($23 million), compared to a net loss of 27 million euros ($31 million) in the first half of 2017. This is mostly due to the impact of a 68 million euros ($79 million) gain following the sale of the Group’s 25% stake in Car2go.   

Net debt

Corporate net debt reached 849 million euros ($989 million) as of June 30 compard to 827 million euros ($964 million) as of Dec. 31, 2017.

The Group’s pro forma corporate net leverage reached 2.8X at the end of the first half of 2018 and is expected to be below 2.5X by the end of 2018 giving the Group further headroom to pursue its acquisition strategy.

The fleet net debt was 5,224 million euros ($6.09 million) as of June 30 versus 4,061 million euros ($4.73 million) as of Dec. 31, 2017. This increase reflects the higher number of vehicles in the fleet in order to sustain the growth of the Group’s operations and the fleet mix evolution as the Group enters its peak season in terms of activity.

Related: Europcar Joins Mobility as a Service Alliance