U.S. Markets closed

Edited Transcript of EUCAR.PA earnings conference call or presentation 23-Oct-19 4:30pm GMT

Q3 2019 Europcar Mobility Group SA Earnings Call

VOISINS LE BRETONNEUX Oct 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Europcar Mobility Group SA earnings conference call or presentation Wednesday, October 23, 2019 at 4:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Caroline Parot

Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO

* Caroline Cohen

Europcar Mobility Group S.A. - Head, Investor Relations

* Luc Peligry

Europcar Mobility Group S.A. - Group CFO

================================================================================

Conference Call Participants

================================================================================

* Harald Christiaan Hendrikse

Morgan Stanley, Research Division - MD

* Patrick Jousseaume

Societe Generale Cross Asset Research - Head of Mid and Small caps Europe Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, and welcome to the Europcar Mobility Group conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Caroline Cohen. Please go ahead, Madam.

--------------------------------------------------------------------------------

Caroline Cohen, Europcar Mobility Group S.A. - Head, Investor Relations [2]

--------------------------------------------------------------------------------

Thank you. Hello, everyone, and welcome to our Europcar Mobility Group conference call with our Q3 results that we have brought forward tonight. The initial date of the publication was on the 7th of November. In a moment, I will hand you over to Caroline Parot, our CEO; and Luc Peligry, our CFO, who will take you through the presentation, and then we will open up the line for questions.

As today's presentation may contain some forward-looking statements, we invite you to read the important legal disclaimer on Slide 2 of this presentation. This presentation is available on the company's website, and a replay of this call will be available on our website shortly.

And with that, I'm pleased to hand you over to our CEO, Caroline Parot.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [3]

--------------------------------------------------------------------------------

So thank you, Caroline. Good afternoon, everyone, and good late afternoon as well for some of you. First, thank you for attending this call despite the very short notice. Obviously, we are releasing our third quarter results a little bit in advance to drive you through the performance of the Q3, which was not in line with our expectations. And the reason why is now that we have the full visibility on it, we are producing this Q3 result, which will come with revised guidance for our year-end.

So let's begin with our Q3 results first.

And on Page 4, what has been achieved over the quarter regarding our BU road map and the significant progress we have managed over this quarter. First, a very good performance in both our Van & Trucks and the Urban Mobility, with double-digit revenue growth. And I will get you back into more details in a few minutes.

In addition to that, in the quarter, we faced the finalization of our expansion in the U.S., with the acquisition of Fox Rent A Car, the U.S. being the biggest mobility market in the world, and it will create a strong growth opportunity in leisure for us, while enable to enhance gradually our offer to our corporate customers from Europe and worldwide for our franchisees and partners. And I will guide you through as well into these details in a few minutes.

If we go to the next page, Page 5, here on this one, the highlight of the less good news, which are pretty self-explanatory. First, Brexit complex situation post the last March postponement of the Brexit exit from the U.K. Parliament, which is still right now going on with less and less visibility and which has a strong impact on the local national domestic economy and with limited short-term visibility and which is impacting us progressively across the quarter, our profitability in the U.K. perimeter, with an acceleration that we can evidence since late August.

And finally, a global economical slowdown on soft macro in the rest of Europe, which has been quite heavily commented as in other perimeters since late August, with a lot of uncertainties ahead. The consequence of these 2 elements together, the Brexit is not new, but the 2 elements combined together doesn't help us to mitigate or compensate each other as a result of a weaker-than-expected volumes in all our markets. And you know that in our industry, we plan volumes and we plan fleets and in fitting to serve those volumes. And with less-than-expected volumes in leisure and decline in B2B volumes in September, we have faced more price pressure than expected during the summer, but more importantly, in September, that doesn't help to mitigate the U.K. Brexit situation.

The result is, obviously, compared to our expectation, a significant impact on the revenue, which is stable for the quarter and not growing. And of course, EBITDA impact, mostly in September that lead us to revise our guidance for the full year as well. So let's go into the details, Page 6.

As you can see, we grew during the quarter by 2% versus last year on the reported perimeter. But on a constant perimeter means, excluding the Nordic perimeter that we acquired 1st of July, we have flattish revenue compared to last year.

And this is the first time that since 3 years in a row, we are facing a quarter with flattish revenue and no growth. And this evolution is really, as I mentioned earlier, soft leisure trends, which are continuing to grow, but at a lower pace than prior quarters and a deterioration on the corporate business volumes from late August. So it is a breaking point for us in our continuous revenue growth and especially versus the beginning of this year.

The drop in volumes was and still is mainly driven by large customer travel fees, which was not offset by growth in other car price segments, which are still growing in the small- and medium-sized enterprise and the car replacements and which we compensate with less qualitative revenue in the leisure customer segments. And for the record, our third quarter -- in our third quarter, corporate segment traditionally represents 30% of the global rental revenue. So it is not a small portion. And it is happening mainly during the month of September.

So in the context of this flattish top line with less qualitative revenue, plus pricing headwinds, we are reporting an EBITDA which is down 8% versus last year. I would say 8% only, and I will explain why in a few minutes.

If we look at the next slide, which is Slide 7, Q3 being the most contributive quarter over the year our 9 months results reflects the same patterns in terms of revenue and corporate EBITDA evolution, and Luc will guide you through after me into more details in the metrics for this quarter and this full 9 months year-to-date.

So now let's dig into more details with some Q3 highlights, Page 8. So as I mentioned in the introduction, over the quarter, the group continued to successfully roll out its BU road map, with significant progress in the super site approach for the Van & Trucks business now that we have more than 20 of them, which is explaining the continuous high growth we enjoy across all the countries in this business in a very fragmented market. So we enjoy a nice penetration and a growing market share.

We also enjoy another very strong quarter in terms of revenue growth for Urban Mobility. For the record, Ubeeqo is probably the car sharing leader in Europe. But most importantly, its growth has been over the course of the last 18 months, quarter after quarter 4 to 5x superior to the market ones. The good things about this business, it has no exposure to the seasonality and the acceleration of the repetition led by customers in the beginning of the year is really impressive and quite promising for the next quarters in terms of growth momentum, but also in terms of getting a strong way to the profitability.

Last but not least, we extended our footprint in the U.S. with the Fox car rental deal, which is, as mentioned, the biggest worldwide mobility market. This will create strong growth opportunities in leisure segments, trucks for the time being is in the leisure segment, while it will enhance our offers to our B2B customers, we have now access to 20 of the biggest airports in the U.S., and we will be able to enhance dramatically the quality of services, the control of those services over the next years.

This deal, which has come right after the announcement of our SHIFT 2023 program is the last of our transformational M&A, and will be closed over the course of Q4.

Slide 9, and how to read our performance. So first, on the U.K., we enjoyed a strong market position. We are #2, but by far beyond the other competitors. And we are particularly exposed to the general macro environment in this perimeter and currently, the Brexit situation that I won't further comment. We were operating in a stable to slight negative momentum since the beginning of the year, but we are compensating, but late Q2 and in Q3, we show an accelerating -- an acceleration of the negative momentum, both in terms of volumes and in terms of pricing.

As a consequence, there was a strong drop in the profit -- drop in the profitability of the U.K. perimeter. And since September, we see strong collateral effects on the Irish perimeter where we see less leisure volumes driven directly from less U.K. cities and in this perimeter, which is impacting also the profitability of this perimeter.

All those 2 together are amounting for 50% of the EUR 20 million gap between Q3 2018 and Q3 2019 of profitability, namely EUR 10 million.

We are managing those 2 perimeters in close coordination with the local management teams to take adequate protection measures of the business and its long-term profitability. But in the short term, we are adapting also the full organization and the cost structures to the current environment.

Plan are already ongoing and launched to severely decrease some cost -- some fixed cost and to get more agility in the cost structures of these perimeters.

If we look on Page 10 for the rest of the group, which we are also facing the economical slowdown, it results in lower-than-expected volume demand in the car leisure segments. Those segments are growing, but slower than expected.

And since the beginning of the year, we see the growth, but we see some decline in the growth space. And the consequence of it is a higher price pressure in most of the markets but in particularly, in Spain with negative adjustments, in particular, in the month of September.

Our BU Low Cost, which is particularly impacted by the Spanish market and the price pressure faced a drop in the RPD over the quarter by 4.2%, but especially into -- in the month of September, and the growth in volumes in the new promising territories like Greece, Turkey and Croatia was not fast enough and big enough yet to compensate this Spanish evolution.

On the corporate side, as I mentioned, the effects of the travel bans in major companies since last -- late August, are affecting our revenues as the leader in Europe, and most of it came into the month of September. So those 2 together volumes less in percent than expected and, in particularly, in September, put more price pressure in the market and the reason why we were not able to compensate those trends in our profitability, but the EUR 10 million negative headwinds besides the U.K. perimeter is relatively well-maintained, and I will disclose you how we have done that compared to the size of the perimeter all across Europe.

Finally, on Van & Trucks, as I said earlier, we face good momentum with increased duration in all our countries, which is explaining a partial RPD decline in this division, but it is perfectly in line with our expectation to continue to grow in an ideal manner these segments.

So on Slide 11. What matters most here is not the measures that we have taken and we took on top of our existing savings measure, but it is the result of what we are achieving now and for the year-end. So the drop of only 8% was the result of a strong mobilization of our teams to switch our top line from the regular corporate business to the leisure segment. So to manage an outstanding utilization rate, as you will see with Luc, we are reporting a stable utilization rate, meaning we are able to compensate the volume drop in corporate, with volumes coming from the leisure segments. But as it was done really during the last part of the quarter with more last minute, the cost of distribution of this revenue to stimulate and capture more volumes was much more expensive than what it was used to be over the last quarters and which is explaining out of the EUR 10 million, a big portion of the drop in the profitability of all the segments during the quarter.

We are obviously working very actively to mitigate those negative pricing headwinds by accelerating the synergies we have at group level and by continuing to enjoy the synergies we were delivering on the Goldcar perimeter and, to a lesser extent, in the Buchbinder perimeter and which let us think that we are well on track to compensate a portion of the pricing drop that we are facing currently.

Slide 12. On the Urban Mobility, which continued to grow heavily, we see revenue growth and solid performance of above 50%, meaning really a continuing evolution with strong car sharing business growth potential but more importantly, non-exposure to the seasonality effect. And we saw now the profitability path to come in the near future, and we will have good news to report for the next year with a strong measure we have taken to reduce the cost, but also looking at the acceleration of the top line, which will play and operational levers.

Page 13. So onwards for Q4. And what are the measures that we have taken for mitigating our top line pressure during Q3? And how we will see those measures to develop in Q4 and those measures to more importantly grow and accelerate during 2020. So you know -- and we discussed already, we have several cost efficiency programs that we have built up since the beginning of the year as part of our midterm prospects and now fully embedded in our SHIFT 2023 program. As for 2020, the scope has been since the beginning of September broadened, and we are accelerating the deployment of this plan to be able to have full flash effects of those planning and those plans in 2020, but to a lesser extent, some part of them as early as Q4 2019. So we have already done the measure in the U.K. in the last weeks, we'll produce effect by year-end, and we will have finalized all those plannings for the U.K. in the course of Q1.

We are expanding the HQ 2020 review to the full real estate of our headquarters everywhere, and we will see significant measures to be managed in the first part of the year. We are accelerating the German integration perimeter between our former Buchbinder acquisition and our Europcar perimeter.

Those measures are now being deployed. The team is in place, and we will be able to roll out progressively this full integration in the course of 2020.

We are creating center of excellence to accelerate the HQ rationalizations. Center of excellence will be placed in southern countries. The decision has been made and the implementation, we start as early as Q1 next year.

And finally, we have cross-BUs integration, so the back offices that we have discussed which are coming on the top of the synergies we have already identified in the BU Low Cost are being addressed. We are contemplating some clusterization, and we are contemplating some strong synergies of the back offices in every territory, with the support of our local [teams].

The network optimization are twofold; long-term network optimization with digital station. But short term, we are revisiting all our processes. We are revisiting some size of our operations, we are revisiting the location and the format. Some of them were already started. We are accelerating those review on the back of the digital but also to fully take into account the fact that the volumes in some territories are not at the level we were expecting.

Finally, we continue to invest in the digitalization, where big savings will come to remove [mandates] or to remove (inaudible), thanks to more digital application. In the front office with the Click & Go digital journey, but also in the way we are managing our back office with the car connections in one platform and with many application that we are deploying internally to go for much more efficiency and to have KPIs for the productivity, which are becoming outstanding. We are in parallel of that, because we are acknowledging that the global environment is less positive that we were foreseeing at the early beginning, we are making a strong review, as I said, of the group's Urban Mobility path to profitability with an adequate review of the brand portfolio to reduce significantly the level of investment next year, while continuing to invest in the growth. So this will be met by year-end, and we will have good results to report to you for the next year.

All of that is confirming that at least EUR 60 million of gross savings will be generated by the end of 2020. We are in the acceleration process for that, taking into account a weakening and softening environment.

So if we go on the Page 14 as a summary of what has happened in the quarter and how we are rolling out the consequence of Q3 by year-end. U.K. perimeter, you have understood, strong profitability group drop with volumes and pricing both under pressure and with a collateral effect, which was not at all foreseen at the beginning of the quarter, which is the Irish perimeter, which is now suffering from less leisure demand.

EUR 10 million, as of the drop of the profitability for the quarter, and we do foresee a EUR 5 million to EUR 9 million continuing pressure on the profitability. EUR 5 million if we do believe the situation on the U.K. and Irish perimeter is not worsening, EUR 9 million in a worst-case scenario, we are in this bracket for this perimeter as we don't totally manage what will be the general situation. The EUR 5 million to EUR 9 million is really the best-case to the worst-case scenario we are foreseeing.

On the other perimeters, mainly 90% of the group, EUR 11 million, which has been recorded for this last quarter, most of it coming from the month of September. As I mentioned, a portion of it is coming from distribution cost in all our perimeters to enhance the demand in leisure segments and to compensate the drop in volumes we are facing in some B2B segments, plus some other increase in cost that Luc will report to you that we think we will totally unwind by the beginning of the year, and a portion of them will be unwind on the fourth quarter.

On the fourth quarter, for the full group perimeter, we see a EUR 5 million-ish impact that could go up to EUR 11 million, depending on some top line evolution on B2B. We are working really strongly to minimize all those elements, but we prefer to guide you with the guidance, which is EUR 5 million to EUR 10 million on this quarter because it is a small quarter, where the revenue impact could be really much more important that's what we have faced in the Q3 perimeter during -- due to the size of the quarter.

Anyway, EUR 5 million to EUR 10 million is the max that we are seeing today. And we do believe we will fight for the EUR 10 million, for sure, in case of worsening situation, we will have to go to a floor of EUR 10 million max.

So the revised guidance is taking into account, as a matter of fact, Q3 results and the foreseen Q4 evolution. If we go on to Page 15, you can see that the revenue forecast for the full year is flat in sales in Q4 as it has been in Q3. It is a drop of profitability of 20 -- plus 20. We give a range. We do believe, and we do -- not believe -- we do see that the EUR 305 million is really the floor in the general situation we are facing. We are fighting for the EUR 315 million, excluding Urban Mobility. And on the Urban Mobility, we are fighting to reduce the losses with significant results to come in the Q1 as early as next year. So as you can see, Q4 is a drop of EUR 10 million compared to last year, which was EUR 50 million. But in a context where the volumes are not growing anymore and the price pressure is still continuing. When we do see that it will anyway be stopped because we are entering now in a more rational market for the summer, where everybody is visiting.

So with that, I give the floor to Luc, that will guide you through the comment of the financial section, and I will take over after he stops on more midterm prospects.

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [4]

--------------------------------------------------------------------------------

Thank you, Caroline. Good afternoon, everybody.

So I will start this presentation with the revenues. Next slide, so on this slide, you can see that the total revenue that has been commented by Caroline are reaching EUR 1.008 million compared to the EUR 990 million that we reported in Q3 2018. So it shows an improvement of 2%. This performance include, of course, the Finland and Norway that integrated the group on the 1st of July. So it's an acquisition, and they are contributing for EUR 18 million. So if you exclude this acquisition and the contribution coming from the good performance of Urban Mobility, this revenue for the group would be flat. I would come back on the mix of revenues between the BUs, the volumes and price and the channels later on, but they play a key role in the analysis of the performance of this quarter.

We agree that this performance is disappointing. And after -- I can tell you, it was after a month of June, which was rather positive with a promising 2.4% growth. We enjoyed the nice growth as well in July. But we had a smooth and a soft August and even in September, it was slightly declining.

However, what we can see from this performance is that the industry remains solid, illustrated by the growth that we have seen in volume with a 3% growth. However, of course, the car rental probably industry overestimated the demand and the market was inflated, leading to this price issue.

On the EBITDA side, we have reached EUR 226 million versus the EUR 240 million from last year. So it's a decrease of 8%. This decrease of, let's say, EUR 21 million reduction come mainly from 3 main areas, as commented by Caroline. Of course, the Brexit, where we saw a decrease since the beginning of April. In fact, it was on the way of recovery since last year. And even during the first quarter, it was fine. We even revised our targets on -- in March for the full year. But after March, in fact, the company, the U.K. perimeter has declined, and we can see now that Ireland is joining as well the same path. So they both suffered from these economic uncertainties. And of course, given the today situation, we don't see any remediation soon. So this crisis will probably generate more losses. We have a 40 -- let's say, EUR 45 million -- 45% of this 25 -- EUR 21 million loss is coming from this area. And so we expect more losses during the last quarter.

The second topic is, of course, the macro economy, where we see a slowdown, especially for the key accounts on our large cost corporate customers.

Especially at the end of August, we see the macro in Germany. We see extending in France. A bit in the U.K., of course, with the Brexit. So we see some travel bans coming down, and that's having some effect in our core countries in terms of sales.

The last topic, which was a big topic for the summer. It's a pricing pressure with this over fleeting in most BUs linked, of course, the reduction in demand versus last year and reflecting this over-fleeted market versus demand.

On the net income, you can see that we recorded EUR 131 million, so EUR 17 million lower than last year, but I would like to highlight as well, it was done with a less financial charges on corporate debt, where we benefited from the last -- latest bond refinancing, which was done in April and a lower tax because of the level of results that -- so these 2 events mitigate the loss on the corporate EBITDA and would be on the financial side and the tax side, it will be a recurring event for the core Q4.

If we dive on the next slide on the key, I would say, parameters of the business. So I mentioned the volume, which are growing by 3%. So the mobility sector is definitely a growing area. We had the contribution, of course, of Norway and Finland in these figures, which are contributing for 1%. So it means that the growth for Europcar was 2%. And we saw some countries, of course, who are suffering from lower corporate versus last year.

So we saw some countries decreasing in the last -- in September -- in August -- late August and September because of this travel ban policies.

On the fleet costs, we have an increase in terms of cost by EUR 11 versus last year. And altogether, fleet cost increased by EUR 20 million. Out of this EUR 20 million, EUR 4 millions are coming from the integration on Norway and Finland.

It's for close to 5,000 vehicles that we integrated. We had as well some volume effect that we had to integrate because of the -- our forecast of the season. We have some increase in terms of fleet, a richer fleet, a more premiumized fleet, especially in Germany. And a higher share of the vans in our fleet, approximately 1% the van fleet represents (inaudible) that was increased to 10%. And on cost side on fleet where there's as well some increased taxes coming from some countries like Ireland and U.K., and also some [internal] issue with the WLTP, a topic that we raised in our previous presentation coming from Germany and France.

We had as well some one-off, I would say, advance operating costs coming from the damage cost and repairs and some positive one-off costs coming from last year. So that's the thing that we have to, of course, that we have to tackle, but making the like-for-like comparison would be difficult. So these were a bit -- [a pain] in the fleet cost for this quarter.

These costs were partly mitigated by a higher damage recovery. So that's a good point because this is something that we monitor closely, and this percentage was increased in the quarter. Overall, what we see on the fleet cost per unit that it's -- on the year-to-date, this fleet cost per unit are just increasing by 1%, by EUR 2 versus last year. So it remains a good performance and good monitoring. I remind you that we had more than 400,000 cars on the road during Q4, which is a significant growth over the last 2 years, a more than 50% growth on that side.

Utilization rates, which is a key driver for our business, it was mentioned by Caroline as well. It's a very important focus that we put on that to maximize the revenue generated by our assets. So we can see that in all BUs, we had a significant level of utilization rate, especially on the cars, we have close to 80%. And on the low-cost, we have 86% of use during the summer. And after that, on the fleet side, maybe I could add the fact that given the last -- the end of the season of August, we accelerate the de-fleeting program since August in the main southern countries.

Next slide is a quick review of the BUs. So on the cars, EUR 716 million. It's an increase of 2%. We see 2 large trends that we commented already. So these key accounts in large countries, we have -- we had a double-digit decrease, highlighting the travel freeze and slowdown in the global economy. However, we can see that the SMEs, small- and medium-sized companies, are still growing. Insurance and car replacement enjoy a nice growth, that are mitigating the slowdown of key accounts, but not as far -- as much as the decrease of the [further] key accounts.

And on the leisure side, we have a growth of 3% in terms of growth.

On the Van & Trucks, it's EUR 170 million for the quarter, a nice -- sorry, EUR 97 million for the quarter in Van & Trucks, a nice increase of 11%. It's a good performance. It's confirming the good strategy deployed to focus on the development of the corporate segment, where volumes are growing by 14%. Of course, we have a price decrease of 4%, which is linked to the longer duration on the duration side. We can see the duration has increased by 8%. Now we are close to 8 days. And the group is driven by countries like Germany, U.K., of course, but we have seen some new countries entering the growth -- the Van & Trucks area. We have Portugal, Ireland and Spain, which are growing as well.

This increase goes mainly for small- and medium-sized companies. So with courier business, last mile and parcel deliveries with nice achievements in major countries.

On the low-costs business, on the revenue, we achieved EUR 170 million in terms of revenue. So they are down by EUR 4 million versus last year. These revenues, we'll see that in the next slide that we have a nice increase in terms of days, but we have a drop in revenue, especially in Spain and Italy. But we have a nice growth in other countries where we operate directly with Goldcar, but not with Europcar, especially in the Turkey, Portugal, Croatia. So these countries are growing by 50% over the quarter.

So we see a nice demand remain growth, strong demands on the strong volume on these territories on the leisure side.

Last business unit that Caroline commented is Urban Mobility, where here, we are increasing by close to 50% over the quarter, mainly driven by the car sharing business, Ubeeqo. And of course, we are fully benefiting from the bid that we won in Paris, where we will have deployed more than 1,000 cars by the year-end so -- in the streets, but we can see that the growth is going as well from most of the countries. We didn't open any new town, so it's really in-fleeting the existing countries and existing towns where we operate and a high usage of the car.

Next slide is about the BU and the evolution in terms of the change in terms of price and volume. So we see on the car side, that we have a soft increase in terms of volume, 0.7%, coming mainly from the leisure, with a limited decrease in RPD, being a good demand and demand in leisure, with a limited effect in price and the weak [overall] demand with key accounts, as highlighted before. 3% in volume decrease and 1% in price, with major impact coming from key accounts, partly offset by a small- and medium-sized company.

In Van & Trucks, we commented already the growth in terms of volume, 11.7% volume growth, the RPD decline otherwise. But we can see as well a good performance on the leisure side, where we suffered for the last few quarters, where we see a nice recovery perform with a decent growth of 5% over the quarter.

On the Low Cost, the growth in volume is 2.8%, but it's not sufficient to cover the drop in RPD by 4.2%. The market is growing, but the price was very under pressure, especially in Spain and Italy due to over fleeting. We are still growing the ancillaries, especially integrating InterRent within Goldcar and which remained a strong contribution to the profitability.

In terms of -- next slide, in terms of margin after variable costs. You see that in terms of cars, we have a slight decrease by EUR 4 million, but we have a EUR 10 million coming from -- contribution coming from acquisition, Norway and Finland. But the BU suffered as well from higher cost of customer acquisition, as we highlighted, mainly coming -- to compensate the lack of volume coming from the key accounts with brokers and e-commerce to sustain the demand since the market was over fleeted. But we can see as well the nice performance in terms of utilization, in terms of growth of rental days, but the revenue related which are more to this cost of acquisition have increased. And the U.K., of course, which is a strong contributor as well, has decreased sharply.

On the Van & Trucks side, the state -- the MAVC is stable compared to last year despite a nice growth in terms of revenue. So we see some cost increase in terms of fleet and rental related. Some of these costs are linked to damages. So that has led us to a change and to take some actions to be implemented to cut this cost and to deploy this change across the operations to tackle this issue. And that's in progress around the countries where Van & Truck is operating.

And the BU Low Cost is growing, especially in countries Portugal and Spain in volume.

Low Cost, the important part in terms of Low Cost. We see the synergies that have been identified during the acquisition, and this year was on the fleet side. So we confirm the acquisition, the savings that we make on the fleet despite the decrease in terms of margin after variable cost of EUR 4 million. But we see that the synergies enabled to deliver higher performance in terms of corporate EBITDA in both in euros and percentage.

So this integration is positive for the group, with a stronger corporate EBITDA, which is relative to the group and stronger and bigger and larger than last year despite a slowdown in terms of revenue.

Next slide is on the P&L. And coming from the revenues that we already commented and the margin after variable cost coming from the BUs.

We've got the network here with an increase in terms of cost of network in 2019 -- versus 2019 of EUR 14 million. I would say that there are 4 topics on the agenda to analyze this increase in terms of cost. One is coming, of course, from integration of Norway and Finland, which represents EUR 4 million. It's really a perimeter effect. The second one is coming from ops cost from the people which are working on a station, they represent 17% of the network cost. And on this side, we had some minimum salary increase in several countries, mainly in Spain and U.K., leading to a price effect of increase of 4%.

And the last point on this change in value of the network is coming from the overhead cost of the network, which are increasing by EUR 4.5 million on the network cost, and it's pushed by the super site where we open much more super site to cover the Van & Trucks, which are really dedicated to the Van & Trucks and in line with our policy. Some rent increase despite, I would say, the cuts in the number of stations that we operated since the beginning of this year.

In terms of HQ, it's a good performance in terms of HQ because we see the decrease in terms of HQ from EUR 88 million to EUR 82 million. It's really now we are rolling out the HQ 2020 plan, which is focusing to deliver EUR 30 million across 2019 and 2020. So we can see some efficiency measures that are already taken by countries and HQ and a good control now at central HQ cost over the last 3 months.

I can tell you that the program is really on track, delivering its cost savings. It's good to see the savings on the P&L. After the long work, which has been done to start -- to work on this and to put the function and the countries around the table, we can see a good momentum on the deployment of this program with some nice transformation and some opportunities, which have been highlighted as well to broaden the scope.

Of course, we have the German operation, where we have Buchbinder and Europcar Germany. This is something which is in progress, which was not on the original road map. There are some clusterization of activities that we will probably look for, some real estate on HQ that we'll contemplate. And we are accelerating, as was mentioned by Caroline, in the U.K., with the closure already announced on 1 of the 2 HQs that's been announced last week, and the full implementation will come in the first quarter of 2020.

Last point on this P&L, the fleet financing, where we see a decrease in the fleet financing cost per unit, and it's really coming from the better conditions that we obtained last year with the fleet bond refinancing and the securitization program that is now fully implemented with Goldcar. So we have transferred all the fleet, which was under bridge financing under this securitization program. And so this benefit to the full cost for the company in terms of corporate EBITDA.

So the full corporate EBITDA for the group, including the Urban Mobility is at EUR 218 million versus EUR 242 million last year.

I move to the next slide on the corporate free cash flow. Here, you have the adjusted corporate EBITDA for the 9 first months. The nonrecurring expenses are recorded for EUR 37 million. They are coming mainly from the restructuring cost that we engage in HQ, that we engage as well in network. We had some -- as well some expenses on the M&A, and you know that the year was rather active between the Scandinavian countries and the U.S., and of course, all the transformation costs that we are incurring which are one-off costs.

In terms of non-fleet working capital -- sorry, in terms of CapEx, on non-fleet CapEx, they amounted to EUR 61 million. They are, of course, mainly linked to our IT transformation projects and the digitization of the group. I remind you that one of the key assets is a Click & Go, that was delivered at the end of June, which is the app -- which is the first step of the full digital customer journey that's been successfully launched in June, but we have as well numerous projects like station digitization as part of the saving that's one visage for the day [to day data] for the station. We have connected gas as well that will participate to the reduction and the optimization of the fleet varies across the ground.

We have the one fleet as well, which is a key asset -- a key topic as well to share the fleet between the various brands. So all these projects are in progress and will be initiatives to sustain our ambition [adjusted] in our strategic plan SHIFT 2023. In terms of change of non-fleet working capital, it's totally flat versus last year. And I think we are on track with our objective to be flat at the year-end, and that's what we want to deliver. In terms of tax, we have a 25%, online with last year quarter.

Next slide is regarding the change in terms of debt. And here, so we have the opening corporate debt, which was EUR 795 million, the corporate free cash flow. And after that, we have got the cash interest on corporate debt that represents at EUR 42 million. So it's a slowdown in terms of cost of the corporate debt. And again, it's due to the impact of the refinancing of the corporate bond that came in April. Combined with the use of a commercial CP, commercial paper, which are at a lower rate than the previous bond -- the previous bond coming from the IPO. So we see already the benefit from this refinancing here in the cost.

Next one is the investing activities. So it's a EUR 59 million that we are here coming from mainly the acquisition of the Norwegian and Finland franchises. But as well, the earnout payment on Ireland and Buchbinder.

We highlighted as well here, the amount that were returned to our shareholders between the dividends that we paid, EUR 39 million and the EUR 41 million on the share buyback, so it's close to EUR 80 million that were returned to our shareholders in the first 9 months.

The next topic is the increase in terms of capital coming from our shareholding -- employee shareholding plan that was closed in July this year, where we raised EUR 15 million in July. That was quite a successful initiative. And after that, you've got the EUR 21 million coming from the price of the refinancing, mostly coming from the redeeming of the original -- the bond from the IPO and the fees attached to this. So that -- this cost, of course, will generate savings that we already see in the corporate interest rate, but it means that roughly, it's a EUR 10 million net savings on the P&L that we will see from 2020 onwards.

The last slide is to guide you a bit for the guidance that has been given to you by Caroline. So I would say that on this slide, there are 3, I would say, 3 columns, they are the year-to-date figures on the left-hand side, you've got the -- on the right-hand side, the full year 2018 and the estimated, the new estimation that we gave for the full year 2019. These figures are excluding Urban Mobility. That's why on the right-hand side, that you will see EUR 2.9 billion and not the EUR 2.95 billion because of the EUR 50 million here are coming from the Urban Mobility. So on the left-hand side, you can see that we delivered on the corporate EBITDA this year, EUR 276 million compared to the EUR 300 million that we had last year on a year-to-date. So it's a minus 1 point in terms of corporate EBITDA margin. What we achieved last year was a EUR 50 million for the Q4. This year, with the new guidance that we gave, it's between EUR 30 million and EUR 40 million that we are contemplating in terms of contribution to the profitability of the group for the last 3 months. And the drivers that we put for -- to add this estimate is a conservative, I would say, figure with a flat revenue, that's what we experienced however in Q3. So it's flat revenue.

And of course, it will be all the plans, the cost-cutting plans that we have already started and that we are now accelerating. Starting with the fleet cost optimization. We have a main driver that will be utilization rate. It is something that we use during this -- that we will strengthen during the last quarter, and all the work around the station around the ops and the network. And of course, we will pursue the HQ 2020, and even accelerating some measures, which are already given some saving deliveries. So from this -- so from these key drivers, we -- the new range that we gave is between EUR 305 million and EUR 315 million, excluding Urban Mobility, and so will be minus 1% in terms of corporate EBITDA margin for the full year.

And so with that, I pass the floor to Caroline to conclude.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [5]

--------------------------------------------------------------------------------

Okay. So thank you. Thank you, Luc. We go to the conclusion, and then we will open the call for the Q&A.

So on the year-to-date on a global positive way, we have achieved a lot. I will come back only on a few of things. We are accelerating the transformation of the company. We have largely renewed our leadership setup with more concentration at the group level and a reorganization of the group. We have also significant delivery of strategic program, which are well advanced.

Click & Go has been mentioned several times, it's live. We are now enhancing progressively the features to reach better customer patterns and to have improved quality, improved repetition. And with that, lowering our future cost of acquisition for the top line, important as you have seen.

We have totally rolled out our new customer care platform at the end of the first quarter to improve also the on the road customer services. And last but not least, we are fighting every day to improve the customer experience with our NPS program, which is delivering remarkable results in every perimeter. And even though in the Goldcar perimeter, we have put this program together. And now we see the first results, even though it's not visible from a price standpoint, we see really in the numbers reporting by each of the customers, real improvement.

Finally on the footprint. We are balancing our growth through corporate acquisition and franchisee and partners. We have the partners in China. We have the partners in India. We have 10 new franchisees in the beginning of the year, and we are entering now in the U.S. with the Finland and Norway being done prior to that.

We are contemplating to deploy our Ubeeqo program as well to franchisees to be able to leverage the fast demand of the customer, but also to rely on other partners to be able to build this program all together.

So these programs are running very well together. It is an investment case, and the reason why we are continuing to invest in our CapEx. A big portion of that is going to the digitalization of our customer journey, digitalization of our station. With that, we will deliver significant savings everywhere in the group to be able to benefit from better customer journey, but also from better digitalization all across our processes.

On the next slide, if we look at what we are building, we are relying on our 4 core brands, namely Europcar, InterRent, Goldcar and Ubeeqo to build one platform for the digital network, digitalization of all the stations to serve all the same customer base, one customer base. Of course, one agile organization with a tech company and the developers, which are based in many sites in Europe, it is the most advanced [size]. And obviously, one talent pool with our people.

We focus on one single customer journey that will differ [in breadth] for the customer and one enlarged customer base. All those infrastructure are being managed, some are more advanced than other ones, but are starting to produce some results, and we see on the customer side, good momentum despite the small negative headwinds that we are facing currently in the pricing, but didn't change the vision, that's the unification of our program is to go for better customer acquisition, better reach and better profitability as planned in 2020 and onwards.

On the Slide 30, I remind you why we are fighting on this direction. Car rental business is growing, car rental business is really serving mobility needs of our customers. But car sharing, which is current all in the German mobility is growing at a higher speed. And we see that it is a decisional business compared to the others, where we will enjoy to leverage our existing assets with one connected car programs to be able to have more and more volumes in the same capacity.

Looking at where we are placed in the value ecosystem. On the next page, I remind you, we are a strong fleet manager company, which is able to manage high level of volumes of cars everywhere on the territories to be able to manage high customer operation and (inaudible) with a strong agility to fleet and defleet and to adapt our systems and our networks to all the circumstances. And we have shown that we are able -- have been able to be very agile in those circumstances.

At the last page for my conclusion. As I mentioned, digital transformation journey, customer and developing new customer base and corporate segments. We are conscious that the result of this quarter are disappointing, we are conscious that the pricing environment didn't help and we are conscious that the macro could be seen as a little bit negative. We are a strong resilient company. We have been able, despite those headwinds, in a very short-term, to adapt our fleet level to the customer demand. And when not adapting the fleet level to the customer demand, look forward more customer demand in different value segments, and we have been able then to protect our profitability and more importantly, to protect our cash flow profile because we need a few weeks to adapt the fleet permanently to the customer demand.

So protection of the group on the profitability, protection of the group on the cash flow generation is what we are aiming at and it is where we are very agile to be able to manage our program in good circumstances and in less good circumstances. But the long run of the planning is really to continue and accelerate digitalization to remove more cost from the company, and to be able to be even more agile to deploy new services and new offering to our customers. More profitability will come from that, while the cost saving measure are well engaged to be able to come back on higher profitability next year in a macro environment, which is nevertheless deteriorating compared to the prior years.

The teams did a fantastic job in the agility to adapt the fit. We are continuing to adapt permanently the story. The cash generation is a strong focus of all our teams in this momentum, but the focus on customers and more profitable customer is what we are targeting up. We have taken measures and we will take other measures to go in that direction.

Now when it comes to the Mobility division. [This year was] a year where we were investing many cities and many programs. Next year, you will see, with an adequate review of the portfolio, strong reduction of the losses in this perimeter, while in parallel, strong growth in our existing cities, which will be able to grow the business while reducing significantly the losses and go to the part of the profitability very, very soon.

So we are -- we remain very confident in the strong resilience of the company, in its capacity to face some negative headwinds and U.K. was particularly impacting us, we have already reacted. We are continuing to react on all those negative headwinds while continuing to heavily invest for the future and for more cash generation and cash profitability.

So with that, Luc and myself are ready for your questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) We'll now take our first question from Patrick Jousseaume.

--------------------------------------------------------------------------------

Patrick Jousseaume, Societe Generale Cross Asset Research - Head of Mid and Small caps Europe Research [2]

--------------------------------------------------------------------------------

3 questions on my side. During your presentation, you compare the -- what you expect now for 2019 to the previous year. But when we compare to the guidance, I mean, it's something like EUR 60 million, EUR 70 million less in term of corporate EBITDA, with a revenue that is probably expected now something like EUR 70 million, EUR 80 million less than expected. So I would like to understand the -- I mean, the very strong drop-through.

Second question, regarding your debt guidance, I just would like to check if you include in your debt, the investment to acquire Fox. And by the way, where are you regarding Fox? Is it going to be -- when is it going to be consolidated? And yes, I see that -- no, I think that's too many questions as of here.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [3]

--------------------------------------------------------------------------------

Okay. Good evening, Patrick, thank you for the questions. Obviously, you're right, the GAAP versus expectations is much more important than the GAAP versus last year. Obviously, the first story is that up until, let's say, the result of September, we were really -- and after the result of September -- August, sorry, we were really forecasting growth in the full business and growth with some margin improvement coming from the pricing to be able to absorb some element of the cost strategy because we have a richer fleet mix, for example, in the car segment to cope with the demand of our customers. We are -- we have a richer fleet mix in the Van & Truck business. And we do have also a view on the customer segments and the customer distribution, which has been totally changed very recently during the course of Q3.

So we were planning for growth and now you see that we are planning for flat year-on-year, and the growth we were planning was to cope with higher revenue coming from higher fleet, meaning that we are enjoying now the higher fleet cost. But due to the pricing pressure, we are facing the cost of the fleet, but we are not facing the revenue under adequate revenue attached to that fleet level. When we look at other -- some elements, it is really the shift mix between -- of the distribution. When we faced late August, but more probably beginning of September, the shift of the B2B volumes in our operations, we were considering that the defleeting process was already well engaged, but to mitigate the impact on our profitability, we decided to enhance our customer demand through direct and indirect channels, which, obviously, cost much more than what it is when you distribute directly your services to the corporate segments. So in fact, there's a question of the quality of the top line, which was not planned at the beginning. And due to the negative volumes and of some pricing pressure, we have not been able to reshift totally the fleet because we are defleeting currently, and we have not been able to [address] the right level of margin that we were planning at the beginning.

Point taken that this is really a drop. I agree with you. Plus, as Luc mentioned, we are suffering of some damages on the fleet for the Van & Trucks, which were not totally foreseen. But this seems that we are fixing right now.

Now the global environment has changed so we are preparing a new fleet planning for the next year with a much more cautious and lower-end cars to be able to cope with the -- this environment. And obviously, the distribution cost that we will plan when we're planning this new context and not in the context of a growing environment where your price are declining.

So the shift that we are facing, if you have understood our discussion, is mainly linked with the shift of the top line, distribution and perimeter and segments. And the rest of the story is the Brexit situation. Obviously, we were planning this year our U.K. perimeter with a nice growth in the profitability, where we have met [sources] to a strong and fast return to profitability by getting some volumes to go for more other distribution channels. And when the Brexit was accelerating, and it was through starting July but probably an acceleration that we really faced severely during late August and September. We are considering that our U.K. perimeter, which is big, is not able at all to be at the same level of margin that we are planning in the recovery, not at all at the margin of the level of last year.

So all those elements together, despite the fact that our cost-cutting programs all across the group are running well, doesn't help us to mitigate because the pricing were not foreseen in that full environment and none of the events were able for us to mitigate the other ones.

Now what we see is a situation when we have rebased the volume. The fleet is well managed, and we are refitting accordingly, and we are preparing more other actions to be able to even more product profitability. Obviously, next year will be planned totally differently and taken into account the shift mix of some customer segments, we will be able to anticipate a much more different revenue patterns playing for different qualitative measures.

On the debt side. I guess, your question is double. For the debt level of the group. We know -- you know we have a double debt level -- a fleet level, which is primarily adapted to the asset level we are operating. So each time we are defleeting, the fleet debt is declining. Start we are infleeting, the fleet debt is increasing, but it is totally an asset-backed model so the fleet level is perfectly under control. On the corporate side, you have seen that we have been able to continue to well manage the corporate debt. The level is 3 because we are facing a lower corporate EBITDA point. I appreciate, I know the computation. We are putting several measures to accelerate cash generation within the group and before Fox to be below 3 by the end of the year, as we were saying. Now Fox is an interesting story. It is a growth opportunity for our customers in the U.S. The acquisition will be completed in the course of Q4, probably in the month of November.

We have said that the level of the corporate debt impact was below 0.3 for this operation. Obviously, we will report that very precisely at the completion of the acquisition because the acquisition will come first with no revenue and with no EBITDA because the last month will be nearly neutral in net income and in EBITDA. So we will enjoy Allied 2 years ago with Gold Card to debt of the revenue. So we will complete the pro forma and this is really what we are going to do for the year -- to the end of the year. So we will report in the next weeks, I say weeks because we are on the closing process, 3 to 4 weeks looking at which, to be sure. And on how we will see the final debt of this perimeter, and we will report it. But please bear in mind, we have 2 level of debt. The one level of debt, which is corporate will be below 3 at the end of this year before Fox. Fox is below 0.3%, and we are going to report very precisely, as a date of the completion of stocks (inaudible) will be all corporate debt and I know it will impact temporarily the year-end closing.

--------------------------------------------------------------------------------

Patrick Jousseaume, Societe Generale Cross Asset Research - Head of Mid and Small caps Europe Research [4]

--------------------------------------------------------------------------------

To make it more simple on that question, could you give us your guidance of debt at the end of the year? I speak about corporate debt after...

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [5]

--------------------------------------------------------------------------------

In terms of absolute amount, do you mean?

--------------------------------------------------------------------------------

Patrick Jousseaume, Societe Generale Cross Asset Research - Head of Mid and Small caps Europe Research [6]

--------------------------------------------------------------------------------

Yes. Yes.

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [7]

--------------------------------------------------------------------------------

I think as we said, the corporate debt, the corporate EBITDA is around, let's say, below the figure that Caroline mentioned, below EUR 300 million. The net debt should be around EUR 900 million, roughly, excluding Fox.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

We will now take our next question from Harald Hendrikse.

--------------------------------------------------------------------------------

Harald Christiaan Hendrikse, Morgan Stanley, Research Division - MD [9]

--------------------------------------------------------------------------------

Yes. 2 quick questions from me. One, a very simple one on the fleet costs. Can you explain why that they've gone up quite a lot, you've obviously had a very long-term trend of reducing fleet cost, which isn't very helpful. I don't really understand why it's gone up so much in the third quarter. And given that 90% of that should be fixed, I'm a bit surprised that I'm surprised. And then the second question, again, back to Caroline, and I'm sorry to have to ask this question, but just as the CEO of this company, can you frame for us when we go and see an investor, how we should frame really the buy case for the stock here. The stock is way down from where it was before. The top line growth has been -- certainly, now offset by some of the most recent weakness in the market and the pricing. The acquisitions that have clearly changed the company significantly. And I'm not, for a minute, questioning what you've done in terms of redirecting the group, but the amount of money you've spent on the acquisitions is now greater than your market capitalization. And you have a net debt at EUR 900 million, which as was discussed, is not what the market likes at a time when the corporate EBITDA for this year is now significantly below what it was last year.

So I'm really sorry to have to ask this question, but you spent an hour explaining how you're executing on the strategy. I know you execute incredibly well and incredibly quickly, but the fact is it's not helping your shareholders. Can you try and address that for us because this is really becoming an issue. And we need to find new investors in the stock.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [10]

--------------------------------------------------------------------------------

Okay. I let Luc answering on the fleet, and I will answer your question, which is a relevant question, Harald.

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [11]

--------------------------------------------------------------------------------

As I mentioned, maybe I was not clear on the fleet side. There are 3 topics, I would say, on the fleet side, we've got -- the first one is linked to the volume and the integration of Mika. On this side, out of the 20 million, we have, let's say, 50% of this coming from the integration acquisition plus the volume effect. After that, we've got some improvements on the fleet and coming from the mix of cars and the fact that the vans are -- the share of the vans in the total fleet is higher than in the past. And after that, we have some, I would say, operating costs in the fleet. So that's another EUR 5 million roughly on the operating side. And it's more, I would say, increase in terms of taxes, you have taxes that we -- I mentioned, Ireland and the U.K., you have as well environmental taxes. And after that, we've got some one-off, I would say, playing on both sides, plus and minuses coming from this year and last year that are on this cost. So that's the overall picture on the fleet side.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [12]

--------------------------------------------------------------------------------

Okay. So on your question, Harald, which is a relevant one on the value and value creation for the shareholders. We are very conscious about what is the stock -- the stock evolution, 2 dimension on that. First, we have been seen as a very cyclical company and a small cap. So we are -- and it's not an excuse, it's a factual explanation where the industry in Europe or the market in Europe are considering us either as part of small cap, either as part of the auto environment, either in the leisure and in the B2B as we are today. We have not been able, and we are correcting this progressively, but we have not been able yet to explain the resilience of the business model. I appreciate the story about the drop on the pricing, but we are taking measures, and we have levers that we are activating. It will take us a few months to adapt, but we have not been totally understood on the resilience of the business model and the strong capability we do have to flexibilize our model.

And I must admit that the fleet, the debt level, as you mentioned, has always been seen as a difficulty. Not because it is difficult, but because the level of the corporate debt is seen as being mixed up with the level of the fleet debt, and we are taking measures today to really better shape those divisions, remove the [sensitivities] of the market on why the debt is so high because the debt for us is really on corporate and on fleet, some of the investors are not capturing it.

On the value creation, I think that the repositioning of the group deserve and deserved up until the recent past significant investments in reshaping our IT, in reshaping our digital journey, in reshaping our distribution cost. And I must admit that even though all those middleware activities are done, from a customer standpoint, it is not really visible. So the market may have the feeling that we are investing and repositioning the company, but with no progress within the cash profile of the company because those investments are made, but we don't see yet the benefit on less cost of acquisition for the customer, less cost in our station and less cost in our operation because the digitalization has not been finalized, and we are in the perfect momentum, where we are investing to reduce cost. But the benefit of it are starting, and you have seen this quarter that we see some of the benefits, but we don't see all the benefits yet. So we have to better explain how and when the transformation, at least, on the core restructuring part is finalized, which is next year, and we are going to be clear, and we have to show our cost to the elements, the cash flow transformation and the cash flow profile will improve gradually in this momentum. Next year, we will continue to fine-tune and finalize the restructuring. But the next year, we will have done the most biggest part of it. And the cash flow generation will be shown as really healthy. As of today, there's a disappointment on the cash flow profile of the company. So we need to continue to show how those measures are visible from the customer, how the cost which we are starting to see a decrease are going to be amplified as early as next year. So the amplification of the cost reduction is going to help investors (inaudible).

And more importantly, we have an (inaudible), which is playing with the mobility. So we do not see -- as the market may fear the description that you may feel because I think people are thinking we are disrupted in the story. When you look at current tool, it is a strong asset to deliver mobility services and what is car rental? It is car sharing with digital. What is car sharing? It is digital applied to car rental. So we are having a strong already historical cash flow profile. We need to improve it. We have to remove the seasonality of the business. Obviously, what people don't like today and I appreciate it, is that we have a quarter which is representing 80% of the earnings for all of the SHIFT 2023 program, is to remove progressively the seasonality of the business. Thanks to digital, to go for more business and more services in Q1, Q2 and Q4, for your Van businesses to reduce the seasonality and to be able to absorb more cost across the perimeter.

So we are working on this direction. Obviously, as negative headwinds now won't help the investors to totally review the story, but we are going to work through and to extend it more in-depth because we really have a strong asset in the end. Our teams are now to manage it. The level of the debt, I appreciate, could be seen as difficult. We don't see it as difficult at all because we have managed it several times, and we are very flexible and resilient, and we are targeting the strategy. Strategy is about execution. We have probably been seen as slow in execution because not visible enough, either in the metrics, either in the customer perception. We are improving that because Click & Go has been delivered. We are improving the cost reduction because you can see the first effect going on. Now negative price -- negative price line today didn't help at all to have the improvement of the visibility.

--------------------------------------------------------------------------------

Harald Christiaan Hendrikse, Morgan Stanley, Research Division - MD [13]

--------------------------------------------------------------------------------

No. Okay. Just as a really quick add-on. When you see investors and stuff, you need to have a good answer for them in terms of what is going to happen in 2020. We need to have a good idea in terms of where the EBITDA but also more importantly, the net income, the EPS and a very precise answer in terms of where do you think you can manage the debt to next year. Now people really need to understand. I know your execution is good, I know you've got a great picture of where this business wants to go but we need to give the investor a little bit more on a short-term basis.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [14]

--------------------------------------------------------------------------------

Yes. So -- and you're completely right. For the next year, we will come back on a full guidance, obviously, during the Q4 results early next year. What I can tell you is that we are reducing significantly the losses and by 1/3 of the urban mobility because we see really the momentum, and we have taken strong actions really here because we see it is a negative point in the eyes of investors. And we are [mutualizing] a lot of the activities to be able to go even beyond that. We are reporting the good progress we are making on what is in our hands, meaning the cost efficiency program and the cost reduction programs. And we are going to manage totally different normative top line on a conservative way, to avoid the negative macro to impact us. And more importantly because your question on the fleet was a relevant one. And the question on the cost of distribution is a relevant one, we are facing this year, higher cost than anticipating due to the shift in the macro. Next year, those costs will disappear. So what we can control is that we will remove a significant cost from our global activity, which is totally under own control in our hands. Now we will see what is the full environment to really manage what is the top line growth. And with those cost reduction, how to really improve cash flow generation and the production that we are working actively. There will be good momentum by year-end anyway on that as well. But you're right, on the guidance on 2020, we will be released as soon as possible.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

We'll now take your next question from (inaudible).

--------------------------------------------------------------------------------

Unidentified Analyst [16]

--------------------------------------------------------------------------------

Just 2 quick one related to the corporate debt. The first one is really, when you talk about EUR 851 million outstanding corporate net debt, do you include commercial paper of EUR 265 million as of end of September into the calculation?

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [17]

--------------------------------------------------------------------------------

Yes, of course. The new CP, the Corporate Paper, the commercial paper, totally, those are backed by the RCF. So it's within the RCF, within the revolving facility.

--------------------------------------------------------------------------------

Unidentified Analyst [18]

--------------------------------------------------------------------------------

Okay. So the EUR 265 million is reflected in -- under the EUR 460-some million?

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [19]

--------------------------------------------------------------------------------

Exactly.

--------------------------------------------------------------------------------

Unidentified Analyst [20]

--------------------------------------------------------------------------------

Okay. Got you. And the second one is related to the secure copper level RCF. Is there any covenant related to that?

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [21]

--------------------------------------------------------------------------------

No. There are no covenant attached to that. No.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [22]

--------------------------------------------------------------------------------

To make you very, very relaxed, we do not consider we have any debt issue nor any covenant issue at all. This is something that we have -- we may have maintenance comments on that which are regular ones, but we don't have any issue. And we don't see where it could be any issue on any (inaudible) and on the liquidity at all.

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [23]

--------------------------------------------------------------------------------

And the maturity for the first facilities are '22. So quite far away.

--------------------------------------------------------------------------------

Unidentified Analyst [24]

--------------------------------------------------------------------------------

Just think about -- probably, just one follow-up on the RCF side because are these outstanding amount of roughly EUR 460 million or EUR 470 million, are -- would you consider refinance of that one by bond?

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [25]

--------------------------------------------------------------------------------

Of what?

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [26]

--------------------------------------------------------------------------------

Of what?

--------------------------------------------------------------------------------

Unidentified Analyst [27]

--------------------------------------------------------------------------------

Of refinance (inaudible) by bond. Well, refinance of the RCF? Yes.

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [28]

--------------------------------------------------------------------------------

No, no, no. The RCF is really something which is revolver. So that's why we decreased last year, the bond -- corporate bond from EUR 600 million to EUR 450 million, to have the flexibility to reduce the levels. So that's why we increased the RCF from the EUR 500 million to EUR 650 million to get this flexibility here. So it's certainly to have -- to give this agility into the business.

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

We'll now take our next question from Patrick Jousseaume.

--------------------------------------------------------------------------------

Patrick Jousseaume, Societe Generale Cross Asset Research - Head of Mid and Small caps Europe Research [30]

--------------------------------------------------------------------------------

Well, actually, my question was a bit one, which was asked previously about 2020. In fact, it's true that it would be a bit helpful to get more on 2020 so that we can effectively measure your resilience and the ability that you have to cut the cost, as we have seen in the past, especially in 2009 when the market was (inaudible) on. So I think that this question was answered. Maybe towards one of four zeros. Dividend. Could you maybe give us your view about the dividend that would be paid in 2020 for 2019? Second question, well, I was a bit surprised that you say, Ubeeqo -- present Ubeeqo as a leader in new mobility in Europe. If I'm not wrong, Drive Now and the custom group together will present (inaudible).

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [31]

--------------------------------------------------------------------------------

I'm sorry, for all the people over the line, we do believe that it's -- has cut his line...

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [32]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [33]

--------------------------------------------------------------------------------

So we -- on dividend, I will answer to all of you the question, and it will (inaudible)

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [34]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [35]

--------------------------------------------------------------------------------

Are we still in line? Someone can confirm that we're online?

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [36]

--------------------------------------------------------------------------------

It's just cut maybe, no?

--------------------------------------------------------------------------------

Operator [37]

--------------------------------------------------------------------------------

Yes, we're still on the air.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [38]

--------------------------------------------------------------------------------

Okay. Okay. Thank you. (inaudible) So on the dividend, we are -- and as we have mentioned that we are continuing to pay our dividend ratio, which is above 30%. So no change in that as we put it very precisely in the press release. On the car sharing part, I appreciate that the mobility space is quite very specific, and we appreciate that there's many kind of business model to answer the question of Patrick, but we will call him anyway. car2go and (inaudible) are a free floating company, which is not a segment we are operating because we do believe the [floating] cannot make money quite soon. Even though if they can make money one day, we are really operating Ubeeqo as a station-based car sharing, meaning that it is current with no station. That's why I'm saying, usually, permanently car rental is car sharing and Ubeeqo is car rental with no station. And this business, we know how to operate it. We know how to grow it, and we know how to make it profitable. So on the question of Patrick, which I think, he was answered already. On the prospect for 2020, we have our strong capacity of resilience that we have proven in the past to be true for the fleet. We have now better fixed cost position compared to prior years. And thank God, we have already, as part of our SHIFT 2023 programs, cost reduction measures, cash efficiency measures that have been already engaged. So we are not catched by surprise to do something totally new. What we are doing is that we are broadening the scope of what we are doing, but we are not reinventing something new. That's why we are able to go for a fast execution, and we have confirmed the EUR 60 million in this execution.

We were having this year, incremental cost to capture more growth in the volumes because the shift of the volumes went a little bit by surprise at the last of August. So we have invested to be able to not be without utilization of the fleet. Those costs will be removed next year. And obviously, we have also a program, which was managed by the team to enhance the quality of earnings and quality of revenues for next year, and we will be able to report in the next months. Good news on that part because we have taken, and it was not at all linked with this quarter, we have taken already strong decision in the prior quarters to change some setup to enhance totally the quality of earnings and the quality of the customers. We are managing to improve profitability, and we'll be able to rely on that as well to see margin accretion, even in a more softer environment. So we will go as soon as possible. Obviously, we will go for Q4, and we will go for the Q4 results as soon as we know something, which is more precise, with also the Board of Directors. We will come back to the market and we will drive the investor progressively on where are the good news and where are the top line evolution situation.

Sorry. I think we have no longer question. Is that right?

--------------------------------------------------------------------------------

Operator [39]

--------------------------------------------------------------------------------

That's right. There appears to be no further questions. I would like to turn the conference back to you, Caroline, for any additional or closing remarks.

--------------------------------------------------------------------------------

Caroline Parot, Europcar Mobility Group S.A. - Chairwoman of Management Board & CEO [40]

--------------------------------------------------------------------------------

So thank you to the people, which are attending the call at the last minute. We appreciate the news is -- could be seen as very disappointing. We are really confident in the resilience of the company and the strong reactivity of our teams to manage this situation. We have good programs to help us to overcome this situation, depending on the macro environment. We know that we are able to adapt quite fastly, even very fastly. It could be a question of a few months, marks a few quarters anyway, and we are really well on track on this momentum to be able to manage. The company is healthy, the company is profitable. We are discussing here of a lack of profitability and not of losses, increased losses. We are profitable, healthy, resilient company, which is net-income positive and which is distributing dividend. So we know the situation is not the wise one, but we are strongly confident to continue to improve. Thank you.

--------------------------------------------------------------------------------

Luc Peligry, Europcar Mobility Group S.A. - Group CFO [41]

--------------------------------------------------------------------------------

Thank you.

--------------------------------------------------------------------------------

Operator [42]

--------------------------------------------------------------------------------

This concludes today's call. Thank you for your participation. You may now disconnect.