Avis Budget forecast hit by Europe slowdown
(Reuters) - Car rental company Avis Budget Group Inc's quarterly profit missed analysts' estimates and the company forecast full-year profit below expectations as a weak European economy hurt travel demand.
The car rental industry, tied closely to airline traffic and hotel bookings, has seen both business and leisure travel demand picking up in the last few quarters.
Rival Hertz Global Holdings Inc reported a better-than-expected quarterly profit on Wednesday as rental revenues increased.
But Avis' large exposure to Europe weighed on its outlook for the year. It acquired Avis Europe for about $1.03 billion in 2011 to expand its presence in the region.
Avis, which dropped out of the race with Hertz to buy Dollar Thrifty Automotive Group in September last year, said it expects to 2012 earnings to be between $2.35 and $2.45 per share, excluding items.
Analysts on average had expected earnings of $2.53 per share for the year, according to Thomson Reuters I/B/E/S.
Avis, whose fleet totalled more than 393,000 vehicles in 2011, also cut the upper-end of its earnings before interest, taxes, depreciation, and amortization (EBIDTA) forecast to $840 million from $875 million.
Total expenses jumped 28 percent in the third quarter.
Net income rose to $280 million, or $2.38 per share, in the quarter ended September 30 from $82 million, or 65 cents per share, a year earlier.
Excluding items, the company earned $1.46 per share, below the $1.51 per share analysts had expected.
Revenue rose 34 percent to $2.17 billion, in line with expectations.
The company's shares were little changed at $17.15 after the bell. They closed at $17.20 on the Nasdaq on Thursday. (Reporting by Sagarika Jaisinghani in Bangalore; Editing by Anil D'Silva and Saumyadeb Chakrabarty)