Avis Europe has warned it would be cutting its interim dividend as revenues were around 7 per cent less than in the first half of 2002.
Updating shareholders with a pre-close trading statement, the company said volumes had returned to pre-Iraq war levels with reservations from long haul travellers starting to recover.
But the improvements will not be enough to prevent the group cutting its dividend with first half results due out in September.
Avis said it expected to declare a dividend of 1.3p a share, down from 2p a share at the half year stage of 2002.
The company, based in Bracknell, Berkshire, had previously warned the flagging business market would batter the first half but has remained hopeful for some recovery through the peak summer months.
Despite the easing of the recent war-related slowdown, Avis said pricing had remained weak. But the company added that it expected some pricing recovery in the second half of 2003 as a result of its actions to boost yields, provided demand continued to improve.
Reservations for European leisure rentals in the crucial summer months are ahead by 10 per cent on last year, the company said.
Corporate-related business continues to be below 2002, impacted by European economic conditions and compounded by the Iraq conflict.
Avis is predicting full year revenues to be down by between 4 per cent and 7 per cent, a marginal improvement on the 5 per cent to 10 per cent fall forecast previously.
PA