Sixt reports good H1 2010: Profit improves substantially, revenue performance as expected

August 21, 2010 (PRLEAP.COM) Travel News
August 21, 2010 - Pullach, 19 August 2010 The Sixt Group can look back on solid business performance in the first half of 2010. Germany's largest car hire company, and one of Europe's leading mobility service providers, achieved a substantial improvement in profits during the first six months of the year, with a consolidated profit before taxes (EBT) of EUR 34.8 million, compared to the previous year's recession-beset figure of EUR 25.5 million. Consolidated revenue was within expectations, decreasing 3.0% in first half-year 2010. The Managing Board has reconfirmed its previous revenue and earnings projections for 2010 as a whole.

Erich Sixt, Chairman of the Managing Board of Sixt AG: "We are pleased with our business performance in the first six months. Of course Sixt does not yet enjoy the same profitability it had before the recession and the financial crisis, but we are well on our way back to that level. Our principles of setting our priority on increasing profitability over growing our volume, and of pursuing a cautions fleet policy, are paying off better and better. I am fundamentally confident about the second half as well. However, excessive optimism would be out of place, given that the economic environment in Europe still remains fragile."

Developments in the Group in the first half of 2010:

At EUR 759.6 million, the Group's consolidated revenue for January through June of this year was 3.0% below the figure of EUR 782.8 million from the same period last year. Revenue from outside Germany increased 2.1%, to EUR 161.4 million.

Rental revenue grew 2.6%, to EUR 374.5 million, especially thanks to welcome growth in Europe outside Germany.
Because of structural changes, other revenue from rental business was well below the prior-year period, as expected, and came to EUR 55.8 million (44.2%).
Leasing revenue increased 3.1%, to EUR 211.6 million.
Revenue from the sale of used leasing vehicles, which is generally subject to fluctuations over the course of the year, rose 4.7%, to EUR 115.2 million.
Consolidated profit before taxes (EBT) for January through June 2010 came to EUR 34.8 million an improvement of EUR 60.3 million over the EUR 25.5 million for the comparable period of 2009. The following factors in particular contributed to this welcome increase in earnings:

Increasing operating revenue on high levels, despite a still-difficult market environment for mobility service providers;
Avoidance of revenue that is not sufficiently profitable ("earnings before revenue"); A reduction in the Group's cost base, and an increase in the efficiency of processes and structures.
The first-half profit after taxes came to EUR 25.7 million, following a loss of EUR 22.4 million for the same period last year.

Developments in the Group in the second quarter of 2010

Consolidated revenue for the period from April through June 2010, at EUR 393.6 million, was 3.1% below the comparable figure for 2009 (EUR 406.1 million).

Rental revenue was EUR 198.5 million, 5.5% above the figure for the same quarter of 2009.
Other revenue from rental business came to EUR 27.1 million, a quarter-on-quarter decrease of 55.9%.
Leasing revenue, at EUR 104.8 million, was slightly above the level from last year (+1.2%).
Revenue from the sale of used leasing vehicles grew 20.0%, to
EUR 62.0 million.
Sixt reported consolidated EBT of EUR 26.8 million for Q2, compared to EUR 9.1 million for the same period last year. Both business units contributed to this substantial improvement in earnings.

Cautious fleet policy retained

Sixt continued to pursue a cautious fleet policy in the Vehicle Rental Business Unit in the second quarter of 2010. The average number of vehicles in Germany and abroad (excluding franchise countries) for the first half of the year was 62,800, compared to an average of 67,700 for full-year 2009, a roughly 7% decrease.

Solid balance sheet ratios

The Sixt rent a car total assets as of mid-2010, at EUR 2.15 billion, were only slightly above the figure from 31 December 2009 (EUR 2.10 billion). The largest items on the assets side of the balance sheet were rental vehicles (EUR 952 million) and leasing assets (EUR 768 million).The Sixt Group still enjoys an equity base well above the industry average. At 30 June 2010, thanks to the profit for the half, equity came to EUR 510 million, about 5% above the figure from the end of 2009 (EUR 485 million). The equity ratio rose to almost 24% (31 December 2009: about 23%).

Outlook for full-year 2010

Fundamentally, the Managing Board is optimistic about the Sixt Group's future business performance. Nevertheless, it must be considered that uncertainty about the overall performance of the economy crucial for Sixt remains high and has even grown in some cases, for example in the debt crisis in major European countries or businesses' continuing reluctance to invest, which still remains evident in the leasing market.

For full-year 2010, the Managing Board still expects a substantial increase in consolidated EBT as against last year. This expectation is based primarily on better revenue quality, and on the cost-cutting and efficiency-enhancement measures implemented in 2009 and so far in 2010. Consolidated revenue for full-year 2010 is still expected to be slightly below the prior year's figure.

Buy back of shares

Today, with the consent of the Supervisory Board, the Managing Board of Sixt AG decided to exercise the share buy back authorisation granted by the Annual General Meeting on 17 June 2010, to purchase the Company's own ordinary and preference shares on the market for a total of up to EUR 20 million (not including incidental expenses).

On the basis of the current trading price for the Company's ordinary and preference shares, this is equivalent to about 1 million no-par value shares, or about 4 percent of the share capital. The distribution between ordinary and preference shares will be based on the availability of these share categories for trading on the market.

The buy back is intended to reduce capital by retiring stock. It will be carried out in compliance with section 14(2) of the German Securities Trading Act (WpHG), in conjunction with EC Regulation 2273/2003 (known as "Safe Harbour"). The share buy back is scheduled to begin no earlier than 19 August 2010 and to end by 31 December 2011.
Economic objectives of the share buy back are to reduce the Sixt Group´s balance sheet and improve financial KPIs such as earnings per share.

Developments at the operating business units

Vehicle Rental:

With their presence in Sixt's core countries Germany, France, the UK, Spain, the Benelux, Austria and Switzerland, Sixt subsidiaries cover far more than 70% of the European rental market. In the other European countries and in other global regions, the Sixt brand is represented by a close-knit network of franchisees. Sixt has Vehicle Rental operations in a total of about 100 countries. The number of Sixt rental offices worldwide at 30 June 2010 was 1,843. Of these, 508 were in Germany.

Among the highlights of the rental business in the second quarter of 2010 was the expansion of Sixt's involvement in electromobility. Since May 2010 Sixt has offered electric vehicles for anyone to rent. This programme is a pilot project in cooperation with electric power utility RWE, to test the viability of this alternative type of drive in everyday use, as well as customer response. The electric cars will be offered successively in Essen, Munich, Hamburg, Dresden and Berlin until the end of April 2011.

The Vehicle Rental Business Unit generated total revenue of EUR 430.3 million in the first six months of 2010. The decrease of 7.5% is entirely the consequence of the expected substantial fall-off in other revenue from rental business. But rental revenue increased 2.6% on the previous period, to EUR 374.5 million. The Business Unit's EBT improved to EUR 27.0 million for half-year 2010 (H1 2009: EUR -36.3 million). Of this figure, EUR 23.4 million was attributable to the second quarter (Q2 2009: EUR 2.2 million).

Leasing:

Sixt is one of the largest German vendor-neutral, non-bank full-service leasing companies, offering corporate and private customers a broad range of additional services for managing fleets and individual vehicles, in addition to pure finance leasing.

A systematic improvement in contract margins, combined with the avoidance of new business that is not sufficiently profitable, lowered the number of lease agreements in Germany and abroad (not including franchisees) to 55,600 as at the end of the second quarter of 2010 (31 December 2009: 60,800 leases). This development also reflected businesses' still-unchanged reluctance to invest, which resulted in a modest business performance in the leasing sector in general.

The Business Unit's leasing revenue increased 3.1% in the first half-year, to
EUR 211.6 million. Total revenue in the Leasing Unit (including revenue from the sale of used vehicles) came to EUR 326.8 million (+3.6%). The improvement in the profitability of the contract portfolio is evident in the substantial rise in EBT for half-year 2010, to EUR 7.6 million (H1 2009: EUR 2.1 million). EBT for the second quarter was EUR 4.2 million (Q2 2009: EUR 1.9 million).

Further information:
Sixt AG
Frank Elsner
Sixt Central Press Office
Phone: +49 - 89 99 24 96 - 30
Fax: +49 - 89 99 24 96 - 32
E-Mail: pressrelations(at)sixt.com
Website: http://www.sixt.co.uk