| Thu 10 Jul 2003, 17:10 | | Avis Southern Africa Limited - Avis stakeholder ne |
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AVIS SOUTHERN AFRICA LIMITED
(Incorporated in the Republic of South Africa)
Reg. No: 1967/010320/06
ISIN: ZAE 000013371
Share Code: AVS
10 July 2003
Dear Avis stakeholder
FUNDAMENTALS STRONG IN Q1 OF NEW FINANCIAL YEAR
All our businesses had an excellent operational performance in the quarter ended
June.
Rent-A-Car Southern Africa boosted its market share by 3% to 41%, increasing
rental days sold year-on-year by 18% on the back of a 17% rise in rental
transactions. In the month of June alone, rental days increased by 23%. Avis
employees continued to improve efficiencies within the business, increasing
overall vehicle utilisation by 4% and people productivity by 11%. Vehicle
holding costs were significantly higher as a result of the large increases in
vehicle prices over the past year combined with higher interest rates and a
slower used car market. Overall pricing increases in Southern Africa have
lagged the sharp increases in vehicle holding costs and were only up by a
marginal 1% year-on-year. As a result, profitability in this division was lower
than last years unusually strong first quarter.
Rent-A-Car Scandinavia increased rental days by 10% year-on-year off a 4% rise
in rentals. Utilisation was down 1%, but people productivity improved by 2%.
The larger component of replacement rentals in that region"s business mix
resulted in overall revenue per day being lower by 7% in local currency. The
season got into full swing in June with a 17% increase in rental days during the
month, and this trend appears set to continue for the rest of the summer. With
interest rates having just been reduced for the third time this calendar year,
and the Iraq war ending, confidence levels in the region are being restored. In
local currencies, profitability levels were maintained, but the rand"s 15% year-
on-year appreciation is negatively affecting the translated results.
Avis Fleet Services grew its on-balance-sheet fleet during the quarter by 2%,
the number of vehicles under maintenance contracts by 11% and the overall fleet
under management by 4%. Good interest margins were achieved and continued
strength in this division"s used car market resulted in a sound improvement in
profits.
MANAGEMENT TARGETS STILL IN SIGHT
Reasonable rate increases are being implemented in Southern Africa, but their
full effect will only be felt in the latter half of the year when the Southern
African economy should also show the benefits of interest rate reductions. In
the meantime, the combination of higher vehicle holding costs and the strong
rand is likely to mean that Avis"s earnings for the half-year will not reflect
growth. Forward bookings in all Southern African segments are showing strong
growth, and in particular we are expecting another good tourist season.
Management believe that despite the slow start to the new financial year, we
will still be able to deliver by March 2004 on all our operational targets and
the 15% increase in earnings.
NORWAY AND SWEDEN TOP CUSTOMER SATISFACTION POLL
Our operations in Norway and Sweden again headed the rankings in Avis Europe"s
latest customer satisfaction survey. The Avis Brand Ambassador programme, which
has proved so successful in Southern Africa, has now been extended to
Scandinavia and will further enhance service levels there.
"WE TRY HARDER" TURNS 40
We Try Harder, one of the best-known and longest-surviving corporate campaigns,
celebrates its 40th anniversary this year. It originated in a survey done by
the American advertising agency, Doyle Dane Bernbach, at a time when Avis was
struggling to establish itself: the company had made no profit for 13 years and
had changed hands three times in as many years. The ad agency found that the
only truly positive thing that could be said about Avis at that stage was that
it tried harder than its competitors. Robert Townsend, then CEO of Avis and
subsequently author of the business bestseller "Up the Organisation", decided to
build the company"s entire marketing platform on this quality. The freshness
and honesty of the campaign caught the public imagination and the promise has
been retained to this day.
For all of us at Avis, We Try Harder is much more than a slogan - it is a way of
life. Through initiatives such as the Brand Ambassador programme, we ensure
that it underpins our behaviour at every human interface.
AVIS/LOVELIFE PARTNERSHIP TO BE LAUNCHED
Avis"s partnership with the HIV/Aids awareness organisation loveLife will be
officially inaugurated in a ceremony hosted by SA Tourism CEO Cheryl Carolus in
Johannesburg on 17 July. Avis is proud to be joining loveLife in its vitally
important campaign to counter HIV/Aids by promoting a healthy lifestyle for
young South Africans. We look forward to making a constructive contribution to
its efforts over the next five years.
ANNUAL REPORT, ANNUAL GENERAL MEETING AND INTERIM RESULTS
Our annual report for the year to March 2003 was published on 12 June and our
interim results for the six months to September will be announced on or about 23
October 2003. If you would like a copy of the report, or to be put on the
distribution list for the results, please contact our investor relations office
at avis@dpapr.com. The group"s AGM will be held at 12 noon on 12 August 2003 at
our head office in Isando.
As always, you are welcome to contact me with any concerns or compliments
regarding service levels or other Avis matters.
Yours sincerely
Grenville Wilson
Chief Executive
