(Reuters) - Hertz Global Holding Inc (HTZ.N) lost more than half its market value on Tuesday after the U.S. car rental company wrote down the value of some of its fleet, forcing it to slash its full-year profit forecast.
Net depreciation of revenue earning vehicles and lease charges in the United States rose 16 percent to $462 million in the third quarter, the company said on Monday.
Hertz overbought in the compact car category and overpromised on performance for the year, Chief Executive John Tague said on a post-earnings call on Tuesday.
Analysts said Hertz’s management team miscalculated its vehicle depreciation rate on compact and mid-sized cars.
“And while we’ve generally been fans of the Hertz management team, this result tells us that this management team may now face questions around credibility,” Barclays analyst Brian Johnson wrote in a note.
Hertz, which has been cutting costs to counter softer rental-car pricing, said that it was on track to achieve its previously announced target of $350 million in savings in 2016.
“Hertz’s cost opportunities start to become irrelevant if it comes in the face of execution issues,” analyst Johnson said.
The company’s total expenses rose 5 percent to $2.43 billion in the third quarter ended Sept. 30, while revenue fell 1.3 percent to $2.54 billion.
Hertz said it now expected full-year profit of 51-88 cents per share, compared with its previous forecast of $2.75-$3.50.
The company’s shares fell to $17.20, their lowest since April 2009. The stock looked set for its worst intraday performance since the company’s initial public offering in 2006.
Shares of rival Avis Budget Group Inc (CAR.O) fell as much as 18 percent to $31.89, but later recouped some losses to trade down 10 percent.
Reporting by Rachit Vats and Ankit Ajmera in Bengaluru; Editing by Sriraj Kalluvila and Anil D'Silva