Avis investigates possible malpractice

Car rental group Avis Europe today warned annual profits could be lower than forecast after it uncovered potential “malpractice” at its Portugal business.

The firm did not specify details of the allegations but said it was facing a profit hit of up to €3m if the claims were substantiated.

It added it had suspended certain members of its Portuguese management as it conducted a full investigation.

The inquiry is the latest headache for the firm as it battles against continued tough trading conditions. In February it said profits had fallen to €10.7m, from €20.1m in 2005, amid restructuring costs of €26m.

The Bracknell-based company, which operates the Avis and Budget brands in Europe, Africa, the Middle East and Asia, said it was exploring various measures in order to offset the potential financial impact of today’s announcement.

It said it believed the alleged malpractice may have resulted in an overstatement of the group’s net assets as at December 31 by around €3m.

The company added: “In the event the investigation confirms the malpractice, the directors believe that the results for the operation in Portugal in future periods will be substantially improved.”

Shares were 2% lower following the announcement.