Avis Europe Plc, the continent's largest car-rental company, said 2006 profit fell 58% because of spending on a reorganization. The shares declined as much as 16%.
Net income fell to €5 million ($6.6 million), or 0.5 euro cents a share, from €11.8 million, or 1.5 cents, in 2005, the Bracknell, England-based company said in a statement on the Regulatory News Service. Revenue increased 4.8% to €1.34 billion. The European car rental industry has become increasingly competitive as people use the Internet to shop for the lowest prices.
Both Hertz Corp. and Europcar International SASU, Avis's main rivals, were sold within the past year by carmakers that owned them and supplied vehicles. „Market conditions in the industry remain difficult,” said Chief Executive Murray Hennessy in the statement. Shares of Avis Europe fell as much as 13.5 pence to 72 pence in the biggest drop since September 2, 2004, and were down 15% to 73.5 pence as of 9:11 a.m. in London.
The stock has declined 8.4% over the past 12 months, valuing the company at about £681.2 million ($1.34 billion). The company rents cars under the Avis and Budget brand names throughout Europe, Africa, Asia and the Middle East. Avis Europe took a charge of €28.9 million for the reorganization, which included job cuts at European headquarters, moving back-office services to Budapest and shifting call center activities to Barcelona, Spain. Savings from the measures will more than double to €25 million this year from €11 million last year, Avis Europe said. (Bloomberg)