Short term car rental - Avis Europe

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					Short term   car rental -
             Avis Europe
                                                                      Car   rental   ( 39 )

             Growth in all strategic markets and segments before
             the events of September 2001.

             Limited impact of 11 September on revenue thanks to
             the geographical diversity of the markets and the bal-
             anced composition of the segments.

             Rapid adjustment of fleet and staff levels and success
             of the initiatives to control fleet costs.

             Conclusion of a joint venture agreement in China in
             January 2002.

“Success of the initiatives
                      to control fleet costs”
( 40 )   Annual          Report        2001

                                                        Activities and results

                                                        The revenue of Avis Europe increased by        In addition to this factor, the drop in the
                                                        2.7% compared with 2000 to EUR                 operating margin from 20.2% to 17.2%
                                                        1,255.4 million. The growth of 8.3%            can also be attributed to the increase in
                                                        registered during the eight months             fleet costs and one-off costs relating to
                                                        running up to the dramatic events of           the Euro conversion.
                                                        September 11 contrasts with the
                                                        reduction of 5% recorded at the end of         The revenue’s fall impact on margin
                                                        the year, particularly in the segment of       during the first quarter was limited by the
                                                        business travel and US inbound rentals.        quick adjustment at minimal one-off
                                                        Prior to this, the growth was visible both     costs of fleet and staff levels to meet
                                                        in terms of volume and prices in all the       demand.       Thanks     to    appropriate
                                                        strategic segments, in particular that of      measures, the fleet was reduced by 5%
                    Revenue                             replacement and in the large European          compared to the level forecast before
                                     (in EUR million)
                                                        markets such as France, Spain and Italy.       September, while its rate of use improved
                                              1,255.4   On the other hand, Great Britain saw only      by 0.7% to 68.5% despite additional
                                    1,222.4             a modest increase in revenue compared          operating constraints. The personnel's
                                                        with 2000 because of the slowing down          level of productivity, measured by the
                                                        of the American economy and the foot           number of rentals per person employed,
1,000                     1,011.2
                                                        and mouth crisis, whereas in Germany           remained almost unchanged for the
                                                        the group is pursuing a policy oriented on     whole year 2001 (-0.8%) compared with
  800                                                   the strengthening of margins rather than       that of 2000.
         726.9                                          on increase of volumes.

                                                        The active presence of Avis Europe in
                                                        geographical segments and markets less
  400                                                   affected by the aforementioned events,
          ‘97     ‘98       ‘99       ‘00       ‘01     such as rentals linked to intra-Europe
                                                        tourism, considerably lowered their nega-
                                                        tive impact on the sales level for 2001.
                 Operating profit
                                     (in EUR million)   The operating profit fell by 12.5% to
                                                        EUR 215.6 million as a result of the
                                                        reduction in turnover during the last
  250                               246.4               quarter, in particular that generated in the
                                                        airports, which accounts for almost 50%
  200                                                   of Avis Europe's activity volume.

  150    147.6


          ‘97     ‘98       ‘99       ‘00       ‘01
                                                                                                                     Car   rental      ( 41 )

Avis Europe also pursued its control           An extraordinary charge of EUR 1.7
policy as regards to the increase in fleet     million (share of D’Ieteren after taxes)
costs for the third consecutive year, in       was recorded following the restructuring
particular via appropriate strategies for      of the on-line pre-owned car sales
the purchase and sale of vehicles, an          activity.
improvement in their rate of use and a
better recovery of the damage costs. This                   Breakdown of revenue                           Breakdown of revenue
proved its worth in 2001 as the increase                         by market                                      by segment
recorded this year amounted to only
1.0% of total revenue, compared with
3.1% in 2000.

The net financial charge rose by 5.5% to
EUR 71.0 million because of the higher
financing needs linked to the increase in
the fleet and the higher proportion of the
fixed rate debt. At the end of the year, the
level of debt was however reduced by
                                                                                 2001 VAR. 00/01                           2001 VAR 00/01
EUR 100 million following the contraction
of the fleet size.                                  France                       19%       +2%                             2001 VAR. 00/01
                                                    Germany                      16%        -2%
                                                    Italy                        14%           -   Corporate               24%       +3%
The tax rate decreased from 25% to 22%.             Spain                        13%       +1%     Leisure                 37%       +3%
                                                    United Kingdom               20%        -3%    Replacement             20%       +6%
                                                    Other                        18%       +2%     Other                   19%       +4%
                                                    Revenue (in EUR million)   1,255.4
( 42 )   Annual   Report   2001

                                  Achievements and developments

                                  With the aim of achieving a better control   In January 2002, a joint venture
                                  over the fleet costs and of taking           agreement - the first of its kind in China in
                                  advantage of the opportunities offered by    terms of car rental - was concluded with
                                  the recent used vehicle market, Avis         the Shangai Automotive Industry Sales
                                  Europe restructured its on-line sales        Corporation (SAISC), the main Chinese
                                  activity    for   pre-owned      vehicles,   car manufacturer operating among others
                                  previously carried out via its subsidiary    under a Volkswagen licence. This joint
                         On the one hand,         subsidiary, in which the partners will
                                  the assets of the latter have been sold to   invest a global sum of US $ 22 million, will
                                  Autobytel UK Ltd in return for a stake of    have an exclusive Avis licence over 25
                                  10% in this company. On the other hand,      years for the entire Chinese territory and
                                  Avis Europe has created in partnership       will quickly develop there the number of
                                  with Inchcape plc, the joint venture         sites and vehicles initially assigned to this
                                  AutoCascade Ltd, whose aim is to             project. Thanks to this investment, Avis
                                  optimise, for the benefit of the             Europe has taken an essential step
                                  professional clientele of manufacturers      towards implementing further its
                                  and short and long term rental               expansion plan in Asia, announced at the
                                  companies, the opportunities to resell on-   time of the stock listing in 1997, which
                                  line vehicles nearing the end of their       offers new long term growth prospects.
                                  renting or leasing life.

                                  Investments in the Internet tool have
                                  continued in order to increase as soon as
                                  possible the proportion of reservations
                                  carried out in this way.
( 44 )
                                                                                                                              Car   rental   ( 45 )


While awaiting a progressive return to
normal levels of growth during the
second half of 2002, Avis Europe will
continue in 2002 with the implementation
of the measures that aim to redynamise
the segments particularly affected by the
events in America, in particular the long
haul tourism sector. At the same time,
segments less linked to air traffic will be
explored by Avis Europe, such as rental to
small and medium-sized enterprises and
those outside airports. Furthermore, the
conclusion of partnership agreements
and in general the programme for
geographic expansion necessary for long
term growth will be continued.

In order to seize all the growth
opportunities with the return of the
economic upturn, Avis Europe has
maintained its existing operational
infrastructure as well as its investment
programme dedicated to the pursuit of its
growth objective.

                                        For more information on Avis Europe, please refer to the Avis Europe Annual Report,
                                        which is available on demand: ++ 32 2 536 54 39

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