Hertz CEO touts turnaround plan after Q2 loss

on Aug13

Hertz Rental Cars shuttle buses transport passengers to the Hertz rental location at Los Angeles International Airport (LAX) in Los Angeles, California, U.S., on Friday, July 26, 2013. Photographer: Patrick T. Fallon/Bloomberg Photo credit: Bloomberg

Hertz Global Holdings Inc. is making advances slimming its bloated fleet of fast-depreciating cars, tempering concerns about the rental-car company’s financial footing as tech giants challenge its business model.

Hertz reported a net loss of $158 million in the second quarter, compared with a loss of $43 million in the same quarter last year. Revenue in the quarter declined 2 percent to $2.22 billion.

“We have made significant progress in the first half of the year, executing on our operating turnaround plan,” CEO Kathryn Marinello said in a company statement. While Hertz increased spending in the first half of the year, it’s completed a “transformation” of its fleet to cope with its vehicles losing their value, she said.

Marinello took over Hertz in January and has tried to turn the company around by selling down its crowded fleet of discounted car models. At the same time, Hertz and Avis face major threats from the rise of ride-hailing and car-sharing companies such as Uber Technologies Inc.

Revenue trend

The early trend for Hertz’s revenue per day in the U.S. for the quarter that started in July has been promising, increasing about 3 percent last month from a year earlier, according to the statement. Preliminary results in August are showing a similar trend, the company said.

Hertz shares climbed 2.9 percent to $14.70 as of Tuesday. The stock has still dropped 34 percent this year.

Investors sold off Hertz shares and bonds last month after the company canceled plans to refinance some of its debt and offered little explanation for why. Analysts have speculated Marinello, 61, may have decided to conserve cash instead of redeem the securities.

Marinello was named CEO after billionaire investor Carl Icahn boosted his Hertz stake late last year. She plans to shrink the rental company’s fleet of compact cars and family sedans and purchase more of the SUVs and crossovers that are drawing greater demand from American consumers. The strategy hinges on SUVs/crossovers improving the company’s rental rates while in service and fetching better prices at auction when Hertz sells them off.



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