by Bill Peters
Business above 2019 levels, strong holiday demand: “These trends continued into the first quarter,” says CEO
Shares of Avis Budget Group Inc. jumped. Hours later Monday, after the rental-car chain reported fourth-quarter results that beat expectations, buoyed by a pickup in travel demand that it said extended into the current quarter.
The company reported fourth-quarter net profit of $424 million, or $10.10 per share, compared to $381 million, or $6.63 per share, in the same quarter of 2021. Revenue increased 8% to $2.77 billion, compared to $2.57 billion. In the previous period – a quarter of a year.
Adjusted for acquisition-related costs and other expenses, Avis (CAR) earned $10.46 per share, compared to $7.08 a year earlier.
Analysts polled by FactSet expected Avis to report adjusted earnings per share of $6.68, on revenue of $2.67 billion.
“Demand in the fourth quarter was strong, as our commercial business performed well above 2019 levels, and our leisure segment continued to perform strongly, particularly over the holiday period,” CEO Joe Ferraro said in a statement. “These trends continued in the first quarter.”
Shares were up 7.2% after hours.
Car rentals have increased over the past two years as more people return for vacations and business travel. This demand was met with a shortage of cars, which was caused by a shortage of chips, and a shortage of cars available for rent after the rental chains sold their rentals in anticipation of lower demand when the pandemic first emerged. Rental prices have jumped with the travel boom.
Avis management said in October that it was confident its “strong summer performance” would continue into the fall and holiday season despite concerns of a slowdown. The company said it offloaded older, mileage-plus vehicles and brought in new ones, and increased the size of its rental fleet in the third quarter.
But the executives said shortages of chips and other parts, as well as delayed auto shipments, remain potential problems, which could make available supplies even lower this year. Trip cancellations have also restricted rental times.
Shares of Avis are up 13.8% over the past 12 months. By comparison, the S&P 500 is down 6% over that time.
Bill Peters
(end) Dow Jones Newswires
02-13-23 1620ET
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