More on Avis
Avis Europe
Avis Europe runs a European car rental network. Based in the UK it has more than 2,700 franchised and fully-owned companies across Europe. Outside Europe the group has subsidiaries in Africa, the Middle East, Asia and the Carribean.
Avis’s December trading statement gave little cause for cheer, with lower than anticipated revenue growth and a decline in revenue per day.
Pricing pressure in a number of markets, particularly France has slowed revenue growth and where the company succeeded in increasing revenue per day (in Spain) it has been at the cost of volumes.
Overall volume growth has been marginal but operational cost efficiencies and interest savings will ensure that profit expectations are met.
The company is facing a poor trading environment and does not expect to increase prices next year and expects margins to decline further. The focus next year will be on increasing yields and expansion of business through lower cost distribution channels, although the company does not appear very optimistic on the likely success of the strategy.
The company has experienced five years of decline (pre-tax profits have dropped from 172m euros in 1999 59m euros last year) to and there does not appear to be any clear strategy of revival. Trading at 44p the stock is on a prospect PE of 9.2x, about 10% below the sector but its prospects, in a tougher trading environment, explains the deeper discount.
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