- Sixt to cut profit forecast again
Sixt, the car rental company, has returned to profitability in the second quarter but has again lowered its annual forecast. The falling residual values of retired rental cars on the used car market and rising interest rates are significantly impacting results. As a result, the company now expects to report a pre-tax profit of €340 to €390 million, down from its previous expectation of €350 to €450 million.
After reporting a loss in the first quarter, Sixt swung to a profit of €63 million in the second quarter, said new CFO Franz Weinberger in Pullach. Revenue increased by 9% year-over-year to a record €1.01 billion, driven by demand in the US, where Sixt is opening more stations. The company's fleet, which has grown to 187,000 vehicles worldwide, is now better utilized, and rental prices that had come under pressure earlier in the year have rebounded, Weinberger said.
"2024 will be a year of transition"
Despite continued strong travel demand and a positive start to the summer season, Sixt expects headwinds from rising interest rates. The company is currently replacing vehicles acquired during the period of scarcity with vehicles that are now available at significantly lower prices. However, the company is still facing the impact of residual value losses on its fleet.
In the first half of the year, Sixt reported revenue of €1.8 billion, but a pre-tax profit of just €35 million, down from €165 million in the same period last year. Last year, the company reported a pre-tax profit of €464 million and had initially expected to reach up to €520 million this year. However, it has now revised its target to €340 to €390 million. "2024 will be a year of transition," said Weinberger.
The profitability gain in the second quarter was largely due to a increase in rental prices for Sixt's 187,000 vehicles worldwide. Despite this improvement, the company is still grappling with the negative effects of residual value losses on its fleet of vehicles.
