Hertz cuts full-year guidance, shares crash

Hertz Global Holdings reported far weaker than expected quarterly earnings amid adjustments to the value of its rental vehicles, and cut its full-year guidance, sending its shares plummeting.

Together with lower rental volumes and increased costs, the car rental company posted third quarter earnings of $44.0m or 52 cents per share.

Adjusted third quarter earnings came in at $134.0m for EPS of $1.58, amid a 1% drop in sales to $2.54bn.

That compared to $2.0 of EPS in the year-ago period.

Excluding extraordiary items its EPS fell from $2.0 in the year ago period to $1.58.

Analysts had projected earnings per share of $2.75 on sales of $2.59bn.

"We are making progress in foundational aspects of our long-term business improvement plan, implementing new systems, improving customer service levels and launching new products.

"However, our near-term financial performance continues to be uneven. A customary vehicle depreciation rate review near the close of the third quarter resulted in a substantial depreciation adjustment, particularly on compact and mid-sized vehicles, that together with rental volume at the low end of our expectations as well as higher net operating and administrative expenses impacted our performance," said John Tague, Hertz president and chief executive officer.

Looking out to the fourth quarter, the firm anticipated an additional depreciation rate adjustment which led it to revise its full-year guidance lower.

Estero,Florida-based Hertz said it now expected full-year 2016 EPS of between 51 to 88 cents together with free cash flow ranging from $250m to $300m.

The company had previously guided towards EPS of between $2.75 and $3.0 alongside free cash flow of between $500m to $600m.

As of 1602 GMT its stock was down by 43.17% to $20.31.