Hertz Global Holdings said it was anticipating its earnings for the full-year to be near its forecast’s top-range providing a strong lift for the stock after a number of restatements for financials and a deep retooling of its operations.
The rental car company based in Naples, Florida announced on Friday that another group of accounting errors lowered the reported net income between 2011 and 2013 by $144 million. That total now brings to an end the restatements process of the company
Hertz’s John Tague the new CEO said the rental car company turned the page and expects that its consolidated earnings prior to taxes, interest amortization and depreciation would be between $1.44 billion and $1.54 billion for the year.
Investors cheered up after hearing the latest forecasts as shares were up over 20% during the session on Friday and settled in at the close up almost 13%.
One analyst said he spoke to his investors and was expecting the income from Hertz to be in the $1 billion range or less. He kept his price target nonetheless at $16 due to the auto rental business vulnerabilities.
Tague speaking on a call with analysts said that Hertz was planning to cut its annual costs by up to $300 million, with close to $200 million realized in 2015.
He added that senior leadership at the company had been rebuilt substantially with talent that was best in its class across the entire company.
He added that the fleet renewal was close to being completed and that the execution was exceptional. The capacity is back in line with the demand.
Hertz like many competitors is facing newer challenges in the rental agency as the increase in car sharing, such as Uber, continues pressuring the rent a car industry. Hertz also is the operator of both Thrifty and Dollar rental brands.
Tague’s plan to reduce costs includes the freezing of the defined benefits pension, closing off airport unprofitable facilities as well as consolidating what it spends on IT services.
Hertz is also buying back shares worth $1 billion and will be financed through the combination of asset sales and free cash flow.
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