Hertz posts worse-than-expected loss after shrinking fleet
[DETROIT] Hertz Global Holdings posted a larger-than-expected loss in the first quarter after the rental company shrank its fleet of cars and some customers slowed bookings.
Revenue fell 13 per cent in the period, contributing to an adjusted loss of US$1.12 per share, the company said on Monday (May 12). Analysts had expected a 99-cent deficit on average, according to estimates compiled by Bloomberg.
The company showed declines on multiple key metrics. While forward bookings from leisure customers were up from a year ago, demand from corporate and government customers has moderated.
Hertz is offering fewer cars for rent as it freshens its fleet and contends with US President Donald Trump's trade war that has rattled markets and consumer sentiment.
Bill Ackman's Pershing Square Capital Management has amassed a nearly 20 per cent stake in the rental giant, in a part as a bet that tariffs will drive up the value of Hertz's fleet. Ackman has said that he thinks the worst is behind Hertz though he expects near-term results will be weak.
Hertz shares fell about 5 per cent in extended New York trading at 7.10 pm. The stock had gained 90 per cent this year to Monday's (May 12) close.
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Hertz said on Monday that it remains on track to reach positive adjusted earnings before interest, taxes, depreciation and amortisation in the third quarter of this year. Its first-quarter adjusted Ebitda loss was US$325 million, worse than analysts expected.
One culprit for missing estimates is a shortfall in revenue, which was US$1.8 billion when analysts expected US$2 billion. The company's vehicle utilisation rate climbed to 79 per cent, up 3 percentage points from a year ago, but still historically weak. Pricing also fell, with revenue per day falling 5 per cent to US$53.38.
Hertz said it's on track to reduce depreciation on its cars to less than US$300 per month in the second quarter, earlier than expected.
This was the first quarter in which Hertz is no longer unloading electric vehicles, which renters shunned and resulted in high repair costs. The strategy misstep led to US$2.9 billion in losses last year. Hertz earlier this year said it achieved its goal of selling off 30,000 battery-powered cars. BLOOMBERG
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