First Half 2018 Results: Good operational momentum across all business units with positive ramp up in Q2 in line with Group’s strategic ambition
- H1 Revenue of €1,297 million up 28% at constant exchange rates with organic growth of 3.4%
- H1 Adjusted Corporate EBITDA of €46 million with Q2 Adj Corporate EBITDA of €71 million up 14%
- H1 Corporate Operating Free Cash Flow of €65 million with Q2 Corporate Operating FCF up 23%
- Net profit of €20 million versus €27 million loss in H1 2017
- Europcar Mobility Group confirms its 2018 financial guidance
Paris, 25 July 2018 – Europcar Mobility Group (Euronext Paris: EUCAR) today announced its results for the first half of 2018.
For Caroline Parot, Chief Executive Officer of Europcar Mobility Group:
“We have made significant progress on the execution of our strategy during the first half of 2018 confirming our organisation into business units and the relevance of the acquisitions made in 2017. 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.
During the first semester, our performance was in line with our expectations, and reflected the change in the Group’s perimeter with an increased seasonality of both revenue and adjusted corporate EBITDA. This year we are faced with an increase in our fixed cost structure due to the integration of the networks and headquarters of our acquired perimeters with synergies and rationalisation programs to be extracted and deployed in the near future.
Our Cars business unit saw positive momentum in both leisure and corporate segments, supported by continued strong growth in southern European countries. Our Vans & Trucks business unit reinforced by Buchbinder has continued to successfully roll out its deployment strategy across Europe’s largest markets and is accelerating the pace of its network optimisation plan. Our Low Cost business unit has been focused on integrating InterRent and Goldcar to establish our leading position in a fast growing and competitive market.
Integrating Buchbinder and Goldcar into the Group was a major stream in our H1 Agenda and continues to be a key priority for the Group. Both integration processes are on track to deliver the expected synergy target for 2018 and the full synergies of at least 40 million euros of cost savings and additional Corporate EBITDA by the end of 2020. This will be complemented by significant action in terms of network optimisation and headquarter cost reduction at Group level over the next two years.
Last but not least, our New Mobility business unit has delivered a stellar growth momentum in the first six months of the year, with Ubeeqo, its car sharing entity, almost doubling its revenues over the period. This lends credibility to our ambition to become a global actor in the mobility space, which is supported by our new corporate identity Europcar Mobility Group, which aims to better reflect our diversification strategy and our ongoing transformation from a car rental business to a global provider of mobility services.
Customer centricity and digitalisation are at the heart of our transformation with some key strategic initiatives to better engage with our customers and improve our operational excellence. A new high in terms of NPS score, the kick off of our Click & Go programme in June and the recent kick off of our Connected Cars programme are just some of the major steps in our digitalisation transformation that we have taken during the first half of 2018”.
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 & 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 H1 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 points during 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 in the first half of 2018 at €236 versus €238 in the first half of 2017 thanks to a decrease in fleet operating costs and coupled with positive impact of recent acquisitions.
On 17 May 2018, we changed our 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
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 UK 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.
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 UK 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.
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
In the first half of 2018, Europcar Mobility Group generated revenues of €1,297 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 EBITDA decreased by 17% at constant exchange rates to €46 million compared to €56 million in the first half of 2017 after a strong Q2 showing a Corporate EBITDA of €71 million, up 14% YoY. 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 compared to €60 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 compared to €88 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.
First Half 2018 operating income came in at €104.9 million compared to €31.8 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 net expense in the first half of 2018, up 34% compared to a net expense of €58.0 million incurred in the first half of 2017. The main reason for this is the full effect of the €600 million corporate bond issued in October 2017 to finance the Goldcar and Buchbinder acquisitions.
In the first half of 2018, the Group posted a net profit of €20 million, compared to a net loss of €27 million in the first half of 2017. This is mostly due to the impact of a €68 million gain following the sale of the Group’s 25% stake in Car2go.
Corporate net debt reached €849 million as of June 30, 2018 (vs. €827 million as of December 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 as of June 30, 2018 vs €4,061 million as of December 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.
 Adjusted Corporate EBITDA is defined as current operating income before depreciation and amortization not related to the fleet, and after deduction of the interest expense on certain liabilities related to rental fleet financing. This indicator includes in particular all the costs associated with the fleet. See “Reconciliation with IFRS” attached.