04.05.2012

Modest improvement at Cramo

Finnish based international rental company Cramo has posted a modest first quarter improvement as its new German operation went negative.

Total revenues were €160 million, 10.9 percent up on the same quarter last year, while last year’s pre-tax loss of €4 million was converted into a profit of €2.4 million this year. Capital expenditure on new equipment was €24.3 million compared to €18.6 million in the first quarter 2011.

All regions of the business posted gains in revenue, with Eastern Europe growing the least – up 7.8 percent and still in the red, while Denmark led the way in terms of revenue, rising 30.9 percent, but this was not enough for it to move into profit. In profit terms Norway Sweden and Finland all showed strong growth.

The one significant disappointment was the Central Europe region, largely Germany, plus Switzerland and Austria – the Theisen Baumaschinen business. Revenues were up 11 percent, mostly due to the fact that the company only had the business for two months last year, compared to three this year. However profits plunged from a loss last year of €1.2 million to a loss of €4.3 million this year. This due, says the company to exceptionally cold weather.

Chief executive Vesa Koivula said: “The start of the year 2012 has been in line with our expectations. Demand for equipment rental has remained high in most of our market areas, and the prices have improved as well. During the first quarter of the year, Finland, Sweden and Eastern Europe have improved their profits. In Norway, adjustments started to yield visible results as profitability improved considerably. I expect that profit will improve in Denmark during the year, too, in spite of the weak start to the year there.”

“In our business, the first quarter of the year is almost always the weakest. Due to the composition of the rental fleet, seasonal fluctuations in Central Europe are greater than on Cramo’s other markets. In January and February, the harsh winter conditions slowed construction activity down both in Germany and in many of the Central and Eastern European countries. In March, demand picked up nicely and I am confident that profit for the whole year will also improve in these markets year-on-year.”

“I am confident that our profit for the whole year will improve year-on-year, despite the fact that there are still uncertainties related to the second half of 2012.”

Vertikal Comment

Overall this is not a great set of numbers for Cramo, although in most of its traditional markets it has done very well indeed, with solid revenue growth and substantial profit improvements. Sadly this has been offset by an awful performance in Germany.

It is certainly true that the weather this year was exceptionally cold and many job sites would have remained closed. But that was also true of other regions. One hopes that this is not the classic case of foreign owners always finding it difficult to make money in Germany. The business will now need to do much better than last year, just to achieve the same profit in 12 months as it did in 11 months last year, let alone post any growth.