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Dollar Thrifty Profit Rises 0.6%

Dollar Thrifty Automotive Group Logo & Rental CarsDollar Thrifty Automobile Group has posted a 0.6% increase in profits for the second quarter, along with lower merger-related expenses. Net income for the car hire company rose from $42.3 million last year to $42.5 million, while revenue fell from $396.2 million to $395.1 million. Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose to between $270 million and $290 million for the full-year – it was estimated in May to be between $260 million and $285 million. This excludes the impact that merger-related expenses have had on the company.

Total costs and expenses for Dollar Thrifty fell 2.7%. Vehicle-utilisation rates dropped from 78.4% to 77.4%. Hire revenue declined 0.5% while the number of rental days rose 3%, offset by a 3.4% fall in revenue per day. The average fleet size was 7.6% greater than the previous year, while the cost per vehicle per month dropped 2.6%.

President and chief executive Scott L. Thompson says that, although they are pleased with their continued rental day growth for the period, the rate per day environment negatively impacted top line revenue growth. The decision made about fleets after the Japan crisis impacted levels and pricing during the quarter.

Thompson also said that they expect competitive price environment to offset volume growth, resulting in rental revenue being in line with that of last year. Since they don’t have a significant contracted business, the company is impacted more by short-term moves in rate changes. Although the rate environment is getting better when compared to earlier this year, it’s still a little below the levels of the previous year, he added.

Meanwhile, Dollar Thrifty has been cooperating with Avis Budget Group and Hertz Global Holdings in seeking regulatory approval for one of the rivals to successfully purchase the company. In June, Avis made the move to buy its European counterpart, which had previously been a part of the company. The rival said that it would focus on the acquisition, but keep an eye on the situation involving Dollar Thrifty. Then almost a month ago Hertz extended its takeover bid to August 5. Last week the rival extended the bid again until September 9.

Speaking of Hertz, the company reported a rise in profits last week due to more rental days. Net income was up from a $25.1 million loss during the same period last year to a $55 million profit this year. Revenue jumped 10.3% to $2.07 billion, while rental days rose 8.2%, which offset a 3.9% decrease in average daily rates. Due to these figures, Hertz rose its adjusted earnings forecast for the year to between 91 cents and 96 cents per share, while revenue is predicted to be between $8.15 billion and $8.25 billion.

Chairman Mark Frissora says that adjusted pretax income for the second quarter beat the $27 million reported in the same period in 2007…pre-recession. These great results are due to strong year-over-year profit improvement in the US rental business, despite heavy investment in strategic initiatives, he added. Hertz is also in the middle of consolidating the acquisition of Donlen Corp for $250 million, which was made last month. This purchase is due to boost the rental agent’s profile in the leasing business.

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