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Third Quarter 2018 Results: Europcar Mobility Group accelerates its transformation and delivers  as a result a record €300 million corporate EBITDA

11/08

Third Quarter 2018 Results: Europcar Mobility Group accelerates its transformation and delivers as a result a record €300 million corporate EBITDA

Third Quarter 2018 Results:

 Europcar Mobility Group accelerates its transformation and delivers
as a result a record €300 million corporate EBITDA[1]  
 

 

  • Digital marketing driving e-commerce performance and leisure revenue growth
  • Successful integration of Goldcar and Buchbinder acquisitions in less than nine months
  • Q3 Revenue of €989 million up 25% at constant exchange rates with 2.6% pro-forma[2] growth
  • Q3 Adjusted Corporate EBITDA of €241 million up 50% with an adjusted corporate EBITDA margin of 24.4% up 410 basis points delivering significant operating leverage
  • Q3 Net profit of €148 million up 42% versus €105 million in Q3 2017
  • Corporate Net Leverage decreases to 2.4x at end of Q3 2018
  • Europcar Mobility Group fully confirms its 2018 financial guidance

 

Paris, 8 November 2018 – Europcar Mobility Group (Euronext Paris: EUCAR) today announced its results for the third quarter of 2018.

For Caroline Parot, Chief Executive Officer of Europcar Mobility Group:

“Accelerating our transformation into a mobility service company, we have delivered a strong set of results in Q3. These results prove how agile we have become with a stronger than ever capability to manage complex projects such as the integration of Goldcar and Buchbinder, in a short time frame, without disrupting our daily operations, even during peak season.

Another great source of satisfaction is our digitalization. Digital Marketing has become a powerful business driver and competitive asset for us. The way we leverage technologies to drive e-commerce performance makes us a front runner in terms of ROI.

The roll-out of our customer centric and digitalisation plans at the heart of the Group’s transformation, fostered the excellent e-commerce Direct-To-Brand performance (leisure growth, invoiced revenue) of Europcar (+9% ytd), Goldcar (+14% ytd) and Ubeeqo (+77% ytd). Key initiatives such as the development of group cross-brand synergies, global campaigns and leveraging technologies created added value for customers and generate additional revenue.

As a result, the Group grew at a robust pace in Q3, showing its strong ability to manage prices as well as its fleet costs in a competitive market environment. Europcar Mobility Group achieved a record level of Adjusted Corporate EBITDA, both in Q3 and over the first nine months of the year, as well as a significant margin uplift, up 410 basis points in Q3.

Hence, we remain confident in our future and fully confirm our 2018 guidance”. 

Third Quarter 2018 Highlights

 

 

 

 

 

 [1] YTD figure excluding impact of BU New Mobility

[2] Pro-forma revenue growth is defined as at constant exchange rates and including the 2017 performance of Goldcar,
Europcar Denmark and Buchbinder

 

Third Quarter 2018 Highlights – per Business Unit

Cars

On a reported basis, the BU Cars generated €667 million of rental revenue up 7.7% compared the third quarter of 2017. 

Our Cars Business Unit benefitted from good growth trends in both corporate and leisure segments. Southern European countries delivered solid growth in the third quarter in spite of some deceleration versus the previous years, notably in Spain.

More importantly, the BU’s overall solid performance shows its ability to manage its pricing in a competitive environment thanks to its continued investment into demand forecasting and pricing optimisation tools; as demonstrated by the Group’s management of RPD pressure in Spain and Italy over the summer.

The UK continued its turnaround focusing on profitable growth.

On a pro-forma basis, the Group delivered a good 2.1% growth in rental revenue in the third quarter of 2018 driven by a 1.7% increase in rental days and a 0.4% increase in RPD.  

 

Vans & Trucks

On a reported basis, the BU Vans & Trucks generated €86 million of rental revenue up 24% compared to the third quarter of 2017.   

The Group’s strategy to focus on corporate / SME customers through longer rental duration, 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 pushed the Group to the market leading position in Germany.    

On a pro-forma basis, the Group delivered 4.5% rental revenue growth in the third quarter of 2018 driven by a 6.5% increase in rental days and a 1.9% decrease in RPD, mainly driven by longer rental durations due to the Group’s increased focus on the corporate / SME’s customers.

 

Low Cost

On a reported basis, the BU Low Cost generated €180 million of rental revenue up 202% compared to the third quarter of 2017. 

The Group’s Low Cost business unit is now operating with two brands, Goldcar and InterRent.

The first nine months of the year have been dedicated to the integration of Goldcar and the delivery of the expected cost synergies, fully in line with the initial value creation plan.

The full integration of the two brands in Portugal and the UK has been finalised before the summer season; the management team of the business unit is currently completing this integration process in Spain, France and Italy that will be finalised before the end of fourth quarter of 2018, ensuring fleet cost optimisation in 2019.

As expected, both brands have delivered summer performances fully in line with our 2018 plans. Goldcar has delivered positive revenue growth, with InterRent starting to be repositioned as a mid-tier brand. InterRent saw anticipated rental volume decline but strongly benefitted from Goldcar’s additional services and sales capabilities. The full mid-tier repositioning of InterRent will take place over the course of 2019.

This repositioning will enable the new management team to fully deploy its commercial strategy, thereby extracting the full value from both brands.

In last summer’s challenging pricing environment in Spain and Italy, owning the Low Cost market leader has enabled the Group to protect its price positioning for the Europcar brand in those southern European markets. This confirmed the strategic rationale for the acquisition of Goldcar from an overall Group pricing perspective. Hence the Group remains very positive about the long term growth prospects of the Low Cost segment and the strong success encountered over the summer in more recently opened countries such as Greece or Turkey bodes well for the future.

On a pro-forma basis, the business Low Cost delivered 0.1% revenue growth in the third quarter driven by a 1.5% increase in rental days and 1.4% decline in RPD.

New Mobility

The New Mobility business unit showed strong momentum with 44% revenue growth on a proforma basis. Both key businesses continue to deliver strong 2-digit growth YoY observed in most of its countries and cities.

Vehicle sharing business (Ubeeqo, GoCar brands) saw its revenue grow by 52%. Key drivers of growth remain improving utilisation rates and enhanced footprint achieved through fleet expansion in existing cities. Scooty, the scooter-sharing business in Belgium, acquired by the Group in Q2 2018, delivered an impressive 68% revenue growth in the third quarter (vs. previous quarter) as it upgraded and more than doubled its free-floating fleet.  Overall, the Vehicle sharing arm is well positioned and perceived by customers as an attractive alternative to car ownership in cities.

Brunel’s (Ride Hailing) business has seen its revenue increase by 35% and delivered good commercial traction with the win of several strategic corporate customer accounts in London. These key accounts, as well as Driver Rental business line continued to scale-up throughout Q3 2018 and have a positive balancing effect on daily peak times; the business has achieved an all-time transaction high point in Q3.

The group continues to consolidate and integrate the New Mobility business with the rest of the Europcar Mobility Group focusing on synergies that range from reduction in fleet holding costs, financing costs and improved in-fleeting capacity, and cross-selling momentum.

 

Third Quarter 2018 – Operational Highlights

70% of the Group’s rental revenue in the third quarter of 2018 were generated in the leisure segment, which acted as the main engine of growth during the period.

Over the first nine months, the Group’s leisure business generated 62% of the Group’s rental revenues, with the Group’s corporate business being responsible for the remaining 38%.

The Group continued to focus on improving its customer service through dedicated programmes. These efforts have enabled the Group to continue to deliver significant improvements in its NPS (net promoter scores)[1]  with an increase of 1.5 points over the last twelve months. NPS reached 56.1 points at the end of September 2018 compared to 54.6 at the end of September 2017.  

In the third quarter of 2018, the Group has made significant progress on two of its key operating metrics: fleet utilization and fleet cost per unit. The Group delivered a solid performance in terms of fleet financial utilization with a 70 basis points increase on a reported basis in the third quarter of 2018 going from 79.6% to 80.3%.

The Group continued to reduce the fleet cost per unit per month which was down €24 in the third quarter of 2018 at €218 versus €242 in the third quarter of 2017 thanks to a better damage recovery ratio and reconditioning especially in the UK and Germany, coupled with a positive impact from recent acquisitions in terms of fleet mix, evolving towards lower category cars.

Third Quarter 2018 –  Financial Highlights 

Revenue

In the third quarter of 2018, Europcar Mobility Group generated revenues of €989 million up 25% at constant exchange rates compared with the third quarter of 2017. On a pro-forma basis, i.e. at constant exchange rates and including the 2017 performance of Goldcar, Europcar Denmark and Buchbinder, the Group revenues grew by 2.6%.

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 7.7%, Vans & Trucks growing by 24% and Low Cost growing by 202%. On a pro-forma basis, these three major business units grew their rental revenues by respectively 2.1%, 4.5% and 0.1%.

The number of rental days reached a new record of 28.2 million in the third quarter of 2018, up 28% versus the third quarter of 2017. On a pro-forma basis, growth in rental days was 2.0% for the Group spread across all its key business units.


Adjusted Corporate EBITDA[2]

Third quarter 2018 Adjusted Corporate EBITDA increased by 50% at constant exchange rates to €241 million compared to €161 million in the third quarter of 2017. As expected, the Adjusted Corporate EBITDA margin of the Group increased by 410 basis points to 24.4% in the third quarter of 2018 mostly as a result of the positive margin impact stemming from the recent acquisitions made by the Group (Goldcar, Buchbinder and Europcar Denmark).

Excluding the impact of New Mobility, third quarter 2018 Adjusted Corporate EBITDA reached €246 million compared to €164 million in the third quarter of 2017 at constant exchange rates.

 

Corporate Free Cash Flow

Third Quarter 2018 Corporate Free Cash Flow reached €102 million compared to €50 million in the third quarter of 2017. The main reasons for that significant increase were the higher Adjusted Corporate EBITDA and a lower level of non-recurring expenses. This doubling of the Group’s Corporate Free Cash Flow generation in the third quarter of 2018 is particularly satisfactory as it was achieved in a context of continued investments in the Group’s digitisation and as a result a higher level of non-fleet related capital expenditure mostly IT related.

 

Net financing costs

Net financing costs under IFRS amounted to a €42.9 million net expense in the third quarter of 2018, up 35% compared to a net expense of €31.8 million incurred in the third quarter 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.  

 

Net income

In the third quarter of 2018, the Group posted a net profit of €148 million, up 42% compared to last year’s net profit of €105 million in the third quarter of 2017. This is mostly due to the impact of the Group’s strong increase in adjusted Corporate EBITDA over the period.

 

Net debt

Corporate net debt reached €791 million as of September 30, 2018 (vs. €827 million as of December 31, 2017).

The Group’s pro forma corporate net leverage decreased to reach 2.4x at the end of the third quarter of 2018 and will continue to decrease during the fourth quarter of 2018.

The fleet net debt was €5,445 million as of September 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.  

 

9 Months or YTD Highlights

 

 

 

 

 

9 Months or YTD 2018 Financial Highlights

Revenue

In the first nine months of 2018, the Group generated revenues of €2,286 million up 26% at constant exchange rates compared with the first nine months of 2017. On a pro-forma basis, ie at constant exchange rates and including the 2017 performance of Goldcar, Europcar Denmark and Buchbinder, the Group revenues grew by 4.0%. This pro-forma growth rate was driven by good volume growth and positive e-commerce dynamic.

Adjusted Corporate EBITDA[3]

YTD 2018 Adjusted Corporate EBITDA increased by 33% reaching €288 million compared to €217 million in the first nine months of 2017. The Adjusted Corporate EBITDA margin of the Group increased by 60 basis points to 12.6% in the first nine months of 2018.

Excluding the impact of New Mobility, YTD 2018 Adjusted Corporate EBITDA reached €300 million compared to €225 million in the first nine months of 2017 at constant exchange rates.


Corporate Free Cash Flow

YTD 2018 Corporate Free Cash Flow reached €167 million up 19% compared to €140 million in the first nine months of 2017. The main reasons for that significant increase were the higher Adjusted Corporate EBITDA and a lower level of non-recurring expenses.

Net income

During the first nine months of 2018, the Group posted a net profit of €168 million, more than doubling compared to last year’s net profit of €78 million in the first nine months of 2017. This is mostly due to the impact of the Group’s strong increase in adjusted Corporate EBITDA over the period but also a €68 million gain following the sale of the Group’s 25% stake in Car2go.

2018 guidance

Europcar Mobility Group fully confirms its four financial targets for 2018 compared to 2017:

– Accelerating pro-forma[4] revenue growth i.e. above 3%

– Adjusted corporate EBITDA (excluding New Mobility) above 350 million euros

– Corporate operating free cash flow conversion rate above 50%

– Dividend pay-out ratio above 30%

 

[1] NPS here only relates to the Europcar Brand

[2] 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.

[3] 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.

[4] Q3 2018 Revenue was calculated on a proforma basis as the full merger of InterRent and Goldcar does not enable the Group to track its organic revenue growth performance anymore. As a consequence, the Group’s initial organic revenue growth target for the full year of above 3% has been replaced by a proforma revenue growth target of above 3%.

Merci de lire attentivement

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