Hertz Global Holdings reported a $223 million loss in the
first quarter of 2017, as the car rental company faced declining revenue and a
depreciating fleet.
U.S. car rental revenue declined 4 percent year over year to
$1.4 billion, and transaction days decreased 1 percent, largely due to the Leap
Day in 2016, according to Hertz. Pricing went down 3 percent. Outside the U.S.,
revenue declined 5 percent to $411 million. Transaction days outside the U.S. rose
1 percent, but pricing declined 4 percent.
Hertz already has declared 2017 a "transition
year," and the company is taking a "necessary depreciation
hit" as it upgrades an aging fleet, CEO Kathryn Marinello said in the
company's earnings call. As such, the company knew results would be poor in the
first half of the year, but the used car market made it even more difficult
than expected in the first quarter, she said.
"What
was unexpected was that the typical seasonal upswing in used car values did not
occur in February this year, as is usually the case," Marinello said.
"Still, we sold 21 percent more vehicles year over year in the first
quarter and are keeping with our long-term strategy to closely match fleet to
realistic levels of demand." Hertz aims to reach an optimal fleet mix by
the end of the second quarter, CFO Tom Kennedy said.