Dollar Thrift Automotive Group has reported a profit for the Q4, which was driven by lower expenses and an improvement in the market for used cars, according to industry experts. This sent the company’s shares to the highest they’ve been for 2 years.
Car Hire companies have been hurting by the economic downturn, like nearly every other company in the travel industry, as consumers cut their travel spending. In a statement, the company said that they expect a low-single-digit growth in transaction days this year due to their continued improvement and the continuing recovery in the credit markets.
The lack of new car sales over the last two years contributed to less available used cars, which lifted prices. As the value of used cars improved, Dollar Thrift didn’t have to depreciate their fleet as much. The company predicts that vehicle depreciation costs will be about $325 per vehicle every month over the course of 2010.
The group says that demand for value-oriented brands and further pricing discipline in the industry will mean moderate price increases in revenue every day on a year-on-year basis. They expect this year’s vehicle rental revenue to increase 2% on last year’s $1.47 billion.
Overall during the Q4, Dollar Thrift’s net income was $11.5 million compared to a $72.2 million net loss for the same quarter in 2008. Analysts had forecast that the group would post an 8 cents per share loss.
Total revenue declined to $345.3 million (by 3%), which was largely due to a decline in rental days, while car hire revenue dropped to $329.7 million (by 2%). Furthermore, administrative, selling and general expenses were down by 13%, while direct operating and vehicle costs were down by 11%.