BRUSSELS - Belgium's largest car retailer D'Ieteren reported a sharp fall in 2003 earnings on Friday as profits at its car rental unit Avis Europe halved and car sales remained weak.
D'Ieteren, which owns nearly 60 percent of Avis, Europe's biggest rental firm, said it expected "slightly higher" profits this year on expectations of higher sales thanks to new car models such as the Volkswagen Golf and Touran.
"Based on the outlook for the three activities, full-year 2004 current result... is expected to be slightly higher than in full-year 2003," it said in a statement. D'Ieteren's activities are car distribution, glass repair and car rental.
Net current profit, which comprises earnings after tax and before goodwill amortization, fell 20.8 percent to 83.9 million euros ($104.3 million) in 2003 due to the cost of launching new models and a slump in the Belgian car market.
The figure beat analyst expectations of a net current profit of 76.5 million euros.
Sales fell 1.2 percent at 3.029 billion euros.
Avis, which also reported on Friday, posted a 51 percent fall in 2003 underlying pre-tax profit, saying it did not expect any significant recovery in demand or pricing this year.
"The outlook is bleak for Avis so the outlook is bleak for D'Ieteren," said Gianluca Pice, analyst at Bank Degroof.
Avis contributed to a third of D'Ieteren's profits last year and half of profits the previous year.
The car rental firm warned investors in December that 2004 profits would fall short of market forecasts due to weak prices.
D'Ieteren, Belgium's exclusive distributor of Volkswagen, Audi, Rolls-Royce and Porsche, said it saw demand picking up this year.
"The upturn in demand observed during the second half of 2003 seems to be ongoing at the beginning of the year, amplified by the favorable effect of the Brussels Car Show," it said.
As a result, it said it expected a 10 percent increase in the number of new cars sold, helped by new models. It targeted a market share of almost 19 percent from 17.8 percent last year.
D'Ieteren also expected another strong performance this year at its glass repair unit, Belron, with growth coming from its French, German, Spanish and Italian operations.
Revenue at the unit rose by 8 percent to 1.06 billion euros while earnings rose 28 percent to 31.2 million euros.