Sixt:Quarterly Results/2023 Q1

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Results

Here is a summary of Sixt Q1 2023 earnings results;

• Revenue grew 19.7% y/y to EUR 695.1 million, above analysts estimate of EUR 684.86 million (17.9%).
• EBT was EUR 33.3 million within management guidance of between EUR 20-40 million.
• North America and Germany were the biggest growth drivers with each growing their revenue by 21.6% and 21.7%, respectively.
• Average global fleet increased 19% y/y to 149,000 vehicles following relaxation in international supply chains.
• Electric vehicles now accounts for 22% of Sixt's fleet in European countries versus 13% in Q1 2022.
• Sixt maintained its EBT forecast for the whole year which stands at EUR 430 -550 million, which means the lower level is above the pre-Covid level.
• It also maintained its expectations for a significant increase in consolidated revenue in 2023 compared to the previous year (2022: EUR 3.07 billion).
• However, Sixt expects cost increases that began in 2022 to have a full impact in 2023.

“SIXT has gotten off to a successful start to the new year and is well on track. We are also very satisfied with the course of the second quarter so far. In view of the continuing good demand and the positive booking situation with airlines and hotels, we are currently also expecting a positive development for the summer season." CFO, Prof. Dr. Kai Andrejewski said in the statement.

Estimates

Summary

Sixt will likely post positive earnings results and outlook given that;

• Analysts are forecasting revenue to beat mid-point management guidance by 0.4%.
• Its competitor, Hertz, posted revenue and EPS results that topped analysts estimates.
• Hertz noted in its earnings call that Europe saw an uptick in pricing.
• As per Hertz earnings results, Q1 saw strong demand for rental vehicles.
• Outlook for the industry is positive.

Management Outlook

• The management forecasts Q1 2023 EBT to be "burdened by special cost items (e.g. US marketing campaign)."

	Q1 2023						2023
Key Items	Lower- point	Y/Y growth	Mid-pint		Upper -Point	Y/Y Growth	Lower point	Y/Y growth	Mid-pint	Y/Y Growth	Upper -Point	Y/Y Growth
Revenue	EUR 638.88	10%	EUR 682.44 million	17.5%	EUR 726 million	25%
EBT	EUR 20 million	-78.6%	EUR 30 million	-67.9%	EUR 40 million	-57.2%	EUR 430 million	-21.8%	EUR 490 million	-10.9%	EUR 550 million	0%

Analysts Estimate

Key Items	Q1 2023	Y/Y
Revenue	EUR 684.86 million	17.9%

Analysts Commentaries

Baader Bank's Christian Obst

• Christian Obst left a buy rating on Sixt with a price target of 140 euros on May 3.
• "Good demand should have given the car rental company a double-digit increase in sales," he said
• However, he noted that "high marketing spend in the US could limit profitability development."

Competitor Results

Hertz

Hertz reported revenue and earnings that topped estimates. Here is a summary of the results.

• Revenue grew 13% year-over-year to $2.05 billion, above analysts estimate of $2.03 billion(+12.2%).
• Adjusted EPS of 39 cents per share topped analysts estimates of 21 cents.
• Hertz said it is projecting for a strong summer demand for rental vehicles and projected a 20% sequential increase in revenue in the second quarter of 2023.
• International inbound travel "remains only 60% back to pre-pandemic levels through Q1."
• CEO Stephen Scherr noted that Q1 results broke seasonal trends where demand in Q1 is usually softer compared to Q4. "Our optimism is further bolstered by the positive demand indicators coming from the broader travel industry as we move into the critical summer season," he noted.
• Scherr pointed out that pricing was softer sequentially in Q1, but rates in March were higher than the whole of Q4. Rates in Q1 were flat year-over-year. However, pricing in Europe is seeing an uptick. "Pricing has been holding, particularly in the U.S market. And we have seen a pickup in pricing dynamics, particularly in the European market," he said.
• Scherr added that airlines and hotels are projecting strong demands "and have reported strength in advanced summer bookings in their earnings calls." However, he cautioned that the economy remains uncertain. "Before returning the call to Alex, it is important that we acknowledge the uncertainty in the market and the view that near-term strength in consumer demand may be unsustainable in a weakening economy," he said.