Shares in car-rental service Hertz Global Holdings, Inc. (HTZ) shed more than 15 percent of their value on Thursday after the company cut guidance for its full year earnings. The company revised its projected earnings per share from $1.78-1.88 to $1.68-1.78.
Weak airport rentals drive reset
Behind the changed guidance was news that airport rental volume was weaker than expected.
"We are revising full year 2013 guidance primarily because of weaker than anticipated volume generated by the Hertz brand in the U.S. airport car rental market, our largest business,” said Mark Frissora, Hertz Chairman and CEO. “Weaker volume impacts not only revenues, but also generates related fleet issues, including lower utilization and the inability of the used car market to absorb our excess vehicles at current market prices. Fortunately, stronger pricing in the U.S. airport car rental market is helping to partially offset softer volume."
The company also revised its guidance for revenue up slightly from a range of $10.8 billion-$10.9 billion to $10.85 billion-$10.95 billion.
Blip in otherwise strong year
Hertz has had a strong year so far in 2013. In July, the company reported a 31 percent jump in profits, and shares in Hertz were up almost 60 percent from the start of the year by the close of business yesterday. However, the tumble from industry-leader Hertz today appeared to hurt other rental companies. Avis Budget Group (CAR) was off almost 6 percent.
Hertz to offer Tesla vehicles
Today’s announcement also brought news that Hertz would begin offering Tesla Motors’ (TSLA) Model S for rental. The new offering will be part of Hertz’s Dream Car Service, which also rents cars from Aston Martins, Porches (POAHY) , and Lamborghini.