Frissora forecasts 2010 growth for HERC

By Murray Pollok02 November 2009

Hertz Equipment Rental Corp (HERC) reported a 35.2% decrease in revenues to US$280.5 million for the third quarter of the year, with lower pricing and volumes resulting in a 68.9% fall in operating profit to $25.2 million.

Mark Frissora, Hertz's chairman and chief executive officer, said he was hopeful that the equipment rental business had reached the bottom of the cycle, although pricing pressures remained because the industry continues to have too much fleet. Average rates fell by 8.6% compared to the third quarter 2008.

Mr Frissora predicted that the equipment rental business would return to year-on-year revenue growth by the second quarter of 2010, and that HERC's revenues for 2010 as a whole would be up on 2009.

HERC's EBITDA (earnings before interest, tax, depreciation and amortisation) margin, based on revenues, was 41.9% for the quarter.

Speaking about the total Hertz business, Mr Frissora said; "Our strong earnings performance in the third quarter reflects sustained progress on expense management and incremental revenue generating initiatives which are offsetting soft, but improving, business travel demand and stabilizing equipment rental volume."

Mr Frissora, in response to a question during the company's quarterly conference call with investor analysts, said Hertz had no plans to sell the HERC business ("HERC is part of the Hertz family and there is no discussion about it other than keeping it as part of the Hertz family").

He also said he would be surprised if within the next 24 months there was not consolidation of the equipment rental business involving major competitors.

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