08.05.2013

Slow start for Ramirent

Finnish international rental company Ramirent has reported a poor first quarter with revenues falling seven percent to €152.8 million. Some of this was exchange rate driven with revenues in local currencies still down over five percent.

The company blames the fall on colder weather in the Nordic countries and a slowdown in construction in central and Eastern Europe.

Pre-tax profits leapt 42.5 percent to €15.2 million, however this includes a €10 million one off gain on its Russian business which has been merged into Fortrent, the joint venture with Cramo. Revenues declined in every region except Sweden as did profitability.

Capital expenditure was down over eight percent at €32.4 million, although sales of used equipment from the fleet also fell substantially from €7.5 million last year to €4.4 million this year. This also had an impact on revenues of course.

Net debt was cut by 14.5 percent to €220.3 million.

Chief executive Magnus Rosén said: “In the first quarter, our net sales were affected by a slightly declining underlying market and a long winter season especially in the Nordic countries, where construction start-ups have been postponed. Demand in the industrial sector remained stable during the first three months of the year.”

“During the first quarter, we have continued to develop a common and consistent business model to realise synergies in all operating countries. In order to meet the weakening market demand, we have scaled down our operations in Europe Central segment and made fleet relocations to improve utilisation rates. We also continued to reduce the workforce and number of customer centres in Europe Central.”

“Fortrent, a joint venture of Ramirent and Cramo in Russia and Ukraine, started its operations in March. Fortrent is the leading equipment rental company in these markets offering us attractive long-term growth potential. The integration process of Ramirent’s and Cramo’s operations is proceeding according to plan.”

“The macroeconomic situation in Europe is still uncertain and we are prepared for changes in operating environment. Ramirent seeks sustainable profitable growth and we want to maintain our strong balance sheet. We will be cautious with costs and capital expenditure.”

Vertikal Comment

This is disappointing result but does reflect a slightly softer market experiencing a harder winter than in the same period last year. At least the company did manage to generate a decent bottom line, even after allowing for the one-off gain in Russia.

Ramirent has already made some significant changes to its operations outside of the Nordic markets, the danger here though is that competitor’s sense blood and it becomes difficult to bounce back from the surgery.

The overall trends reflect those seen in Cramo’s results last week but Ramirent should be better placed to pick up lost ground over the rest of the year. The company says that it is still confident of meeting its original projections with a relatively flat year forecast in 2013.

Hopefully the second quarter will be substantially brighter.