09.08.2010

Losses mount at Cramo

Finnish based international rental company Cramo has reported higher losses on flat first half revenues, although it sees improvements on the horizon.

The company reported first half revenues of €215.2 million, slightly shy of last year’s revenues at this point. Revenues for the second quarter were better, rising over four percent to €114 million, as the markets begin to improve according to the company.

However losses continue to mount with pre-tax losses for the first half of €10.7 million compared with loss of €8.7 million for the same period last year. Losses for the quarter almost doubled from €2.5 million last year to €4.2 million this year, in spite of the higher revenues.

Looking at the results by major region Sweden and Norway posted gains for the first half, while Finland was down almost nine percent - although on a quarterly basis it edged upwards slightly. Denmark fared worse falling 28 percent for the six months and 23 percent for the quarter.

Of most concern though is Central and Eastern Europe, but not for revenues which were down just five percent for the half and up slightly for the quarter. However the division posted an operating loss of €8.8 million on revenues of just over €19 million. Although the loss is not quite as bad as last year it does appear to represent a disproportionate percentage of the group’s losses. €1.7 million of the negative numbers covers reorganisation costs and credit losses.

Capital expenditure for the first half was slightly up on last year at €20.2 million, of which €4 million was involved with acquisitions. For the year as a whole it expects to spend around €40-50 million after allowing for acquisitions.

Positive cash flow jumped from €7 to €18 million for the period, leaving the group’s net interest bearing debt around €60 million lower than at the same time last year.
Outlook

The company says that it expects construction and equipment rental service markets to recover gradually in 2010. With construction activity beginning to increase in 2010 in Finland, Sweden and possibly Russia. In Poland, growth is expected to continue. Norway, Denmark, the Czech Republic and the Baltic states are expected to decline further.

The Group has modified its guidance for the year to: “The Group sees a
gradual market improvement, however, uncertainty remains. Gearing to go down based on steady positive cash flow. EBITA margin to improve compared with 2009.”

The old guidance was: “Although the market in Q1 2010 was weak, the Group still sees a gradual market improvement. Uncertainty remains high. Gearing to go down based on steady positive cash flow. EBITA margin to improve compared with 2009.”

Chief executive Vesa Koivula said: “A turn has occurred in the market as expected. Although it is not yet visible in the Group's profit, I expect the second half of the year to improve compared with the first half of the year and the second half of 2009. The most recent construction market forecasts as well as messages from our customers have been positive. Residential construction in particular has picked up in several markets.”

“In line with targets, our cash flow was strong during the first half of the year and the balance sheet improved. As the outlook improves, we are again investigating growth opportunities based on acquisitions.”