09.08.2012

Cramo plus 5%

Finnish international rental Cramo has reported a five percent increase in first half revenues although the second quarter was tough.

Total revenues for the six months edged up five percent to €321.4 million, while pre-tax profits – boosted by the sale of the company’s Modular Space division in Finland – more than quadrupled to €8.5 million. Total non-acquisition capital expenditure for the period was €65.1 compared to €71.2 million last year.

In the second quarter revenues were virtually flat at €161.4 million, while pre-tax profits edged upwards by five percent. Looking at the divisions Finland dropped 18 percent in the quarter following the sale of the Modular space business, Central Europe, which is largely Germany and Austria saw revenues fall by over eight percent and profits take a hammering. Cramo blames it on a fall in infrastructure spending in what is an overall buoyant construction market.

Chief executive Vesa Koivula said: “The year started on a positive note, but during the spring Southern European problems affected the economic climate throughout Europe. Cramo does not operate in Southern Europe, but the general uncertainty has meant customers holding back their investment decisions. Also Central and Northern Europe have been affected. However, in some of our markets, in particular in Norway, the Baltic countries and Russia, demand is growing.”

“For 2013, the construction market forecasts are more positive for Cramo’s main markets. Norway and Eastern Europe posted a positive profit development in the second quarter. Finland and Sweden performed close to expectations. After a sluggish start of the year, Central European profit performance improved during the second quarter.”

“We will continue our efforts to align our Central European business with that of the rest of the Group. As a means of concentration, we terminated our operations in Switzerland.”

“In a move to concentrate on core rental activities, we divested the modular space production and customised modular space rental businesses in Finland at the end of March. The divestment reduces the Group’s sales numbers. I am confident that our result for the whole year will improve year-on-year, despite the fact that there are still uncertainties associated with the second half of 2012.”

Vertikal Comment

Cramo needs to be wary of falling into the corporate trap of trotting out a string of market excuses for every disappointing result, when in some cases others have performed well in the same markets.

The second quarter is not great, although there are some extenuating circumstances, its biggest challenge though is to avoid getting sucked into a downward spiral in Germany. The market there has a knack for disrupting ‘incomers’ denying them of a fair profit and at worse distracting them from their main business.

The German rental market walks to a different beat and outsiders need to be aware of that and to embrace it or risk years of turmoil.

Having said all this the company is in good shape and likely to have a good year after all, although it looks as though fellow Finn Rami is once again pulling out in front.