(Adds second-quarter sales results, details, background,
Aug 19 Rental car company Hertz Global Holdings
Inc said on Tuesday it is withdrawing its full-year
financial forecast and expects 2014 results to be "well below"
its previous guidance due to business challenges and costs
related to a review of the past three years' results.
The company said in a regulatory filing that its full-year
results would be affected by operational challenges, including
recalls by car makers, higher-than-expected operating expenses
and weak demand in its equipment rental business. (1.usa.gov/YwpVmG)
The company previously forecast full-year 2014 adjusted
profit of $1.70 to $2 per share on revenue of $11.4 billion to
Analysts on average expected profit of $1.82 per share on
revenue of $11.48 billion, according to Thomson Reuters I/B/E/S.
In addition, the company said on Tuesday the divestiture of
its equipment rental business, announced in March, could be
delayed beyond the previously announced early 2015 date due to
its accounting review.
Hertz said in June that it would restate or correct
financial results for the past three years to fix accounting
errors originating in 2011.
The company previously said it had identified errors
totaling $46.3 million in prior periods.
In Tuesday's filing, the company said second-quarter U.S.
rental car revenue increased 4 percent, while rental car
revenue-per-day rose 2 percent.
Limited fleet availability due to recalls by car
manufacturers hurt U.S. rental car revenues, Hertz said.
International rental car revenue rose 7 percent, driven by
higher demand in Europe and New Zealand, and its worldwide
equipment business recorded sales growth of 1 percent.
The company, which has yet to report its first-quarter
results, said this month it would be unable to report
second-quarter results by Aug. 11, citing the accounting review.
The company warned in May that it would not report
first-quarter results on time and said it had identified errors
that might cause it to restate its 2011 financial statements.
At the time, Hertz said it needed to do more work related to
evaluating the capitalization and depreciation timing for
"certain non-fleet expenditures." The company said adjustments,
including for allowances for doubtful accounts in Brazil, would
likely reduce its 2011 net income by as much as $9.8 million, to
Hertz's accounting problems come as the car rental industry
is picking up because business and leisure travel is increasing
along with an improving economy in the United States.
However, Hertz has not been able to benefit, partly due to
higher expenses. The company's adjusted net earnings fell 13
percent in the 2013 fourth quarter.
Hertz, under pressure from investors to focus on car
rentals, had said in March that it would spin off its equipment
rental business, raising $2.5 billion to reduce debt and fund a
$1 billion share buyback.
(Reporting by Ramkumar Iyer in Bangalore; Editing by Leslie
Adler and Cynthia Osterman)