Hertz Global Holdings Inc (NYSE:HTZ) reported that it is expecting earnings for the full-year to be at the high end of its guidance. The company recently revealed another round of accounting mistakes, dropping earnings over 2011 through 2013 by $144 million.
New CEO at Hertz, John Tague said the company is now anticipating consolidated profit, before interest, taxes, depreciation and amortization, to come in the range of $1.45 billion to $1.55 billion for the full year.
Shareholders and investors were pleased with the new outlook and HTZ shares rose nearly 12 percent on Friday. However, a Morgan Stanley’s analyst Adam Jonas still has a price target of $16 per share on HTZ stock over concerns regarding the vulnerability of the auto rental unit.
While speaking to analysts on a conference call, Tague said that the company is looking forward to minimize annualized expenses by up to $300 million. Roughly $200 million will be realized in 2015. The company has substantially recreated the senior leadership team that has the best-in-class talent across Hertz, he said. The company’s fleet renewal is quite close to completion and now the capacity is in line with the demand, Tague added.
Hertz, like its rivals, is experiencing new challenges in the industry, as the popularity of car-sharing like Uber continues to influence the rental industry.
The company’s cost cutting strategies include shutting unprofitable off-airport units, freezing defined benefit pension plans and consolidating what Hertz spends on IT services offered by third parties. The company also plans to repurchase its own shares worth $1 billion. The buyback will be backed through asset sales and free cash flow, according to the company.
Last month, Hertz increased airport retail car-rental charges by $5 a day, while off-airport prices were lifted by $3 a day.
