Investment: Economic gloom fails to dent Avis car rentals
Thursday 24 September 1998
Renting out Ford Mondeos to travelling executives is a cyclical business. Given the general economic slowdown - not to mention the problem of plunging used car values - it's no surprise shares in Avis Europe have dropped by a third since the beginning of June.
But hang on. Interim figures from the group, released yesterday, show little evidence of a slowdown. In the half year to the end of June (Avis is in the process of switching its financial year end) revenues rose 8 per cent to pounds 252m while operating profits were up by a quarter.
Avis pushed through its first price increase in three years while increasing volumes by a tenth. Improved productivity lifted margins by almost three percentage points to 19.5 per cent.
On resale values, Avis doesn't worry because it sells over 80 per cent of its cars back to the manufacturer at an agreed price.
It looks as if, true to its corporate slogan, Avis is trying harder.
Longer-term trends are also working in its favour. Helped by its geographical spread, the company is doing exclusive deals with travel groups such as Airtours to provide rental cars for holidaymakers. It is also supplying replacement cars to people who suffer a roadside breakdown.
Meanwhile, chief executive Alun Cathcart thinks city dwellers will increasingly turn to renting cars rather than bothering with the expense of buying one.
On upgraded full-year profit forecasts of pounds 94m the shares, up 22p to 223.5p yesterday, trade on a forward earnings multiple of 18.
Avis looks capable of yearly profit growth of 10 per cent for the foreseeable future. The recent weakness in the share price is an opportunity. Buy.
- 1 Porn block in India: hundreds of sexual websites banned, internet outraged
- 3 Gamers confess the worst things they've done in The Sims
- 4 Sex with robots will be ‘the norm’ in 50 years
- 5 Barack Obama turns 54: The US President's best put downs to celebrate his birthday
Jackie Chan climbs to second place in Forbes' Highest Paid Actors list after magazine includes actors working outside US movie industry
Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
Gwen Stefani and Gavin Rossdale divorce: One of music industry’s most enduring couples announce split after 12 years of marriage
Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
Dutch King Willem-Alexander declares the end of the welfare state
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
iJobs Money & Business
£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...
£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...
£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...
£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...