Sixt:Quarterly Results/2023 Q3

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See: 2023 Q3 Report

Results

• Revenue in Q3 grew by 13.2% y/y to EUR 1.13 billion, in-line with analysts estimate amid strong demand, solid pricing and record fleet.
• EBT was EUR 246.9 million (-12.8% y/y) versus analysts estimate of EUR 239 million (-15.6% y/y) amid rising interest and depreciation costs and strategic investments..
• In the 9 months 2023, fleet value was EUR 4.70 billion (+22.7% y/y) but Sixt said they will act with utmost discipline in their fleet planning in 2024.

  "We expect to have tight levels of fleet, which will ensure high-capacity utilisation and a sustained positive price level, " CFO Kai Andrejewski wrote.

• Sixt raised its 2023 lower EBT guidance to EUR 460 million (-16% y/y) from EUR 430 million (-21% y/y) but lowered the upper guidance to EUR 500 million (-9% y/y) from EUR 550 million (flat growth y/y).
• Germany was their strong revenue and EBITDA growth segment.

Management Guidance and Analysts Estimate

Management Guidance

• The management only gave guidance for the full year 2023.

Key Items	FY2023	Y/Y growth
Revenue	Expects a significant increase compared to FY2022
Mid-point EBT	EUR 430 to 550 million	-11% at the mid-point

Analysts estimate

Key Items	Q2 2023	Y/Y growth
Revenue	EUR 1.13 billion	13%
EBT	EUR 239 million	-15.6%
Net income	EUR 170 million	-15.4%
EPS	EUR 3.63	-15.1%

Analysts Opinions

Q3 2023 and full results

• Baader Bank analyst Christian Obst expects (Oct.24) Sixt to boast third-quarter results that meet forecasts and to maintain to confirm its outlook. However, he lowered his estimates for operating profit since he expects fleet growth to be impacted by high interest rates.
• DZ Bank analyst Dirk Schlamp expects (Oct.19) Sixt to post solid third-quarter results. However, he lowered his estimates in the backdrop of continued subdued consumer confidence and the weakening geopolitical situation.

Customer satisfaction

• Berenberg analyst Yasmin Steile said (Nov.3) she doesn't see press report about dissatisfied US customers as a sign that Sixt growth strategy in U.S has failed, but will monitor the development closely.

Competition from Europcar

• Hauck Aufhäuser analyst Nicole Winkler doesn't see (Sept. 21) Europcar's expansion to U.S as a serious threat to Sixt.

Current Rating and Price Target

Firm	Price target	Rating
Berenberg	147 euros	maintained at buy
Baader Bank	140 euros	maintained at buy
DZ bank	lowered from 125 to 115 euros	buy
Deutsche Bank	125 euros	hold
Hauck Aufhäuser	108 euros	buy

Competitor expectations and results

Hertz

Summary of results

Key items	Actual	Y/Y Growth	Q/Q growth	Analysts estimate
Revenue	$2.7 billion	8.3%	11%	$2.73 billion
Adjusted EPS	$0.70			$0.77
Revenue per day (Pricing)	$62.46	-7%	2%
Fleet utilization	83%	3%	1%
Depreciation cost per unit	$282	52%	45%
Transaction Days (in thousands)	43,095	16%
Americas segment revenue		6%
International segment		17%
Americas pricing		-8% (lapping of strong quarter)	2%
International pricing		-6% (lapping of strong quarter)	3%
North America leisure business pricing			6%
North America fixed-cost business pricing			0%
Americas utilization	84%	3.2%	1.6%
International utilization	80%	3.3%	1.8%

Insights from the earnings call

• Hertz missed estimates for profit amid Tesla price cuts, rising costs of repairs, stronger resale value in the previous year, and rising depreciation costs. The company said price cuts by Tesla has lowered resale value for its EVs by about one-third and that the price of repairing an EV is now double the costs for repairing a gasoline car.
• The company witnessed higher incidence of EV collision and damage, which is a company-specific problem since EV market in U.S has lower incidence of EV collision compared to ICE market.
• Hertz total EV fleet is about 11% of the total fleet (590,000), Tesla's represent 80% of that.
• "Hertz made $800 million more selling vehicles last year than it will this year," Chief Executive Officer Stephen Scherr said in an interview.

• Depreciation cost was up year-over-year due to a decline in net vehicle disposition gains which was at elavated levels in 2022.
• Demand was strong in the quarter and pricing was above the pre-pandemic levels (stable sequentially). "We believe that various inflationary factors will continue to support tighter fleets and more elevated rates versus those historically experienced in the industry, all consistent with our ROA focus," Scherr said. They expect year-over-year declines to moderate as they move through October, as they have witnessed "ongoing strength in leisure across North America as well as Europe."
• In Q4, Hertz expects depreciation to "key off the market and to fall within a range of 280 to $300 per unit with variability to be occasioned by volatility and residual values which could alter gross and net depreciation and which may cause us to adjust our fleet plans accordingly through the end of the year."
• Scherr said EV price declines will benefit them in terms of forward purchases.
• "I would say in our Hertz brand, which plays to a more premium product both by way of service, offering loyalty and the like, we continue to see strength in leisure both in North America and in Europe, "Scherr answered an analyst who asked about the state of demand while noting that some airlines seeing softening in demand.

Implications for Sixt

• Mixed results. Strong demand in the quarter and a decline in pricing year-over-year.
• Sixt likely to incur huge depreciation costs due to lapping of quarter that had strong resale value.
• Ongoing strong demand in the current quarter.