08.08.2013

Ramirent slows

Finnish international rental company Ramirent has reported a slow first half in terms of growth.

Revenues were over six percent lower at €313.6 million, largely due to the move of its Russian business into the Fortrent joint venture. Pre-tax profits for the period were flat at €30.4 million. The company continued to invest in its fleet with capital expenditure up almost five percent to €62.4 million. At the same time net debt was reduced by almost six percent to €264.2 million.

Looking at the second quarter revenues fell back 5.3 percent to €160.8 million, while pre-tax profits dropped almost 24 percent to €15.2 million. Largely due to a higher interest charge.

Chief executive Magnus Rosén said: “The slow start of the year continued into the beginning of the second quarter due to cold spring weather. Net sales decreased by 0.7% in the second quarter; adjusted for the transfer of the operations in Russia and Ukraine to Fortrent. Sweden and Norway were the best performing markets. Margins remained stable over the period and we reached all our long-term financial targets during the second quarter. Although, we will continue our work to drive profitable growth.”

“Overall, market development is mixed. In the Nordic countries, market demand was at a fairly good level, except for Finland where activity weakened compared to last year. Demand for equipment rental remained stable in Europe East. In Europe Central, market conditions remained weak and our measures to scale our operations to fit the reduced demand situation continued. Demand in the industrial sector remained stable in the Nordic countries. The integration of Fortrent’s business operations is proceeding according to plan.”

“After the review period, we have signed an agreement to exit the Hungarian market. This divestment is in line with our aim to strengthen the strategic focus on higher growth opportunities in our core markets in the Baltic Sea region. The sale of the Hungarian operation will result in a non-recurring divestment cost of approximately €2 million, which will be recognised in other operating expenses in the third quarter.”

“Due to uncertainty in the near-term demand outlook, we maintain high readiness to manage changes in market conditions. Our focus is on operating on cautious capital expenditure, strict cost control and on maintaining a strong balance sheet.”

“We continue to develop our common Ramirent platform to realise higher operational synergies throughout the Group. We are also strengthening our long-term competitiveness by developing our workforce and improving customer experience in all our customer sectors through integrated solutions and value-added rental services.”

Vertikal Comment

These lacklustre numbers mask what is a very reasonable underlying result and some fairly significant changes in the business which should pay off well in the mid to long term. The sale of the Hungarian business is a bit of a shock, but the company has struggled with this operation for some time.

It is a little unclear where the business is heading in terms of geographic growth, given this move, but it still has much work to do and huge potential in its other central and eastern European operations without needing to add new markets. The direction and progress of the business will become clearer later in the year.