Europcar puts aside €44m as fraud inquiry starts

Headline corrected from pounds to euros

Europcar dropped into the red in the first half of the year and disclosed its had put aside €44 million following accusations that customers were overcharged £30 million for damaging vehicles.

The Serious Fraud Office was reported to be preparing to start a criminal inquiry earlier this month after the Daily Telegraph reported potentially fraudulent charges for windscreens and other repairs which were inflated by up to 300%.

Issuing half year results, Europcar said: “On 23 June 2017, the Leicester City Council Trading Standards Services opened an investigation into repair costs levied by Europcar UK.

“The Europcar Group has launched a thorough investigation into the matter and Europcar UK is fully cooperating with the authorities.

“At this very early stage of the investigation, the Europcar Group has decided to record a provision of an amount of €44 million in its financial account for the first half of 2017.

“Europcar will continue to communicate as appropriate as matters develop.”

Separately, the company revealed that it had released a provision of €45 million it had booked in its 2015 accounts in its financial accounts for the first half of 2017 after the French Anti-trust Authority announced in February the dismissal of a case against the French car rental industry.

The group posted a net loss of €27 million against a €2.8 net profit in the first half of 2016.

“This is due to the impact of a €39 million charge due to non-recurring expenses which relate to a downsizing expense at Europcar Germany’s headquarters, an increase of the Group’s consulting fees to accelerate its transformation and significant M&A [merger and acquisition] fees paid following our recent acquisitions,” the company said.

Europcar chief executive Caroline Parot made no reference to the repairs scandal as the company revealed that half year revenue rose by more than 10% at constant exchange rates to more than €1 billion.

She said: “We delivered a solid set of operational and financial results for the first half of 2017 with a good operational performance across all of our corporate countries and three major business units which resulted in a strong double digit growth in both revenue and corporate operating free cash flow for the group.

“During this first half, Europcar also significantly stepped up the pace of its acquisition momentum and is now in a position to have completed the bulk of its ‘2020 Ambition’ in terms of acquisitions.

“Following the significant acquisitions of Buchbinder in May and Goldcar in June, we look forward to welcoming the experienced management teams of both companies into the Europcar Group with their best-in-class know-hows and solid track records in the low cost segment.

“The integration of these two highly compatible businesses into the Europcar Group will not only create a major player in the low cost segment but is also expected to deliver significant cost and revenue synergies for the group as a whole.

“These game changing transactions also confirm the major role we want to play in our industry’s European consolidation process.

“After the closing of these two major acquisitions expected in the second half of 2017, we intend to focus on their integration, delivering the expected synergies, and continuing to work on the digitalization of our customer journey, the development of our footprint and the pursuit of our operational excellence.

“2017 first semester will be remembered as a semester of significant progress towards our ambitious strategic plan for 2020 and we feel confident in our ability to deliver our ambition of reaching at least €3 billion of annual revenue and an adjusted corporate EBITDA margin at the group level of at least 14% excluding new mobility by the end of 2020.”


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