Movida Participacoes S.A.
Primary Credit Analyst:
Thais R Abdala, Sao Paulo;thais.abdala@spglobal.com
Secondary Contacts:
Felipe Speranzini, Sao Paulo + 55 11 3039 9751;felipe.speranzini@spglobal.comLuisa Vilhena, Sao Paulo + 55 11 3039 9727;luisa.vilhena@spglobal.com
Table Of Contents
Credit Highlights Outlook
Our Base-Case Scenario Company Description Business Risk Financial Risk Liquidity Covenant Analysis
Environmental, Social, And Governance Group Influence
Issue Ratings - Recovery Analysis Reconciliation
Ratings Score Snapshot
Table Of Contents (cont.)
Related Criteria
Related Research
Movida Participacoes S.A.
Business Risk: WEAK
Financial Risk: SIGNIFICANT
Brazil National Scale brAA/Stable/--
Credit Highlights
Key Strengths
Key Risks
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Solid position as one of the three largest players in the Brazilian car
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Highly competitive rent-a-car (RaC) market, resulting in low pricing power;
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rental and fleet management market;
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Ability to preserve liquidity and leverage, adjusting fleet size by
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Limited scale and geographic diversification, operating a total fleet of about
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increasing used-vehicle sales; and
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118,000 cars;
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Adequate access to credit in the local market and support from its
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High capex requirements to sustain fleet renewal and expansion; and
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parent,
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Exposure to cash flow volatility in the RaC segment, which under normal
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conditions generates about 50% of total cash.
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High exposure to the RaC segment implies risks of greater earnings volatility. Since Simpar's (formerly JSL S.A.) acquisition of Movida in 2013, the company has been investing to expand its fleet substantially to meet the increasing market demand in the RaC and fleet management and outsourcing (GTF) segments. While the latter segment has been growing rapidly over the past few years, the RaC segment still represents about 60% of the company's total fleet. This reduces earnings predictability and raises risks of cash flow volatility due to the segment's following characteristics: short-term contracts, fierce competition, and cyclicality of demand among tourists and corporate customers.
Movida Participacoes S.A.
Chart 1
Solid position in Brazil, but the company lacks the scale and diversification of larger players. We view Movida as well positioned in the Brazilian market, given that it's one of the three largest players with high brand recognition and increasing scale. Nevertheless, Movida operates only in Brazil, with much lower asset and revenue base than those of its peers, such as Localiza Rent a Car S.A. (BB+/Stable/--; brAAA/Stable/--) that has a leading position in the Brazilian market, and Enterprise Holdings, Inc. (A-/Stable/A-2), which is the world's largest car rental company with nearly $22.5 billion (close to R$115 billion) revenues in 2020 and others that have a global presence, such as Avis Budget Group (B+/Negative/--). Movida also generates a lower share of revenue from the more stable GTF segment than its domestic competitor, Companhia de Locação das Américas (brAAA/Stable/--).
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