08.11.2013

Ramirent hits slow patch

Finnish international rental company Ramirent has reported a third quarter fall in revenues and profits as slower markets add to the divestment of its Russian and Hungarian operations.

Total revenues for the nine months fell 7.7 percent to just under €480 million, while pre-tax profits dropped 12.9 percent to €51 million. Year to date capital expenditure though was up slightly to €91.9 million.

Moving on to the third quarter revenues were down 10.6 percent at €166.2 million, although if the loss of the divested business is taken into consideration the fall is closer to three percent. Pre-tax profits for the period plummeted over 26 percent to €20.6 million.

Revenues were down modestly in all of the Nordic markets apart from Denmark, which is still recovering from a low level, while Central and Eastern Europe are looking more buoyant.

Chief executive Magnus Rosén said : “Net sales decreased by 3.3 percent at comparable exchange rates in the third quarter, adjusted for the transfer of the operations in Russia and Ukraine to Fortrent, as well as the divestment of our Hungarian business. The demand for equipment rental in the third quarter was influenced by slightly weaker demand in the construction sector in the Nordic markets except for Denmark, which saw some pick-up in activity. Demand in the industrial sector remained fairly active in our Nordic markets. Europe East enjoyed favourable market conditions reflected in good demand for equipment rental. The integration of Fortrent’s business operations continued according to plan. In Europe Central, market conditions remained weak and we continued to scale down operations to fit the reduced demand situation.”

“In the third quarter our EBITA margin excluding non-recurring items improved to 17.6 percent, Finland and Norway were the best performing countries. Cash flow was strong for the first nine months, showing an improvement of 29.1 percent despite an increase in capital expenditure. Our financial position strengthened further during the third quarter. Profitability was in line with our expectations in all segments except for Denmark, where we have initiated measures to improve profitability.”

“The near-term market outlook continues to be uncertain. We are however well-positioned to manage changes in market conditions. At the same time, we continue to develop our common Ramirent platform to realise higher operational synergies throughout the group.”

Vertikal Comment

While this is not a bad result given the markets in which it operates, Ramirent is showing some early signs of losing touch with its day to day markets and people. Based on nothing at - all apart from gut feel, listening and reading between the lines of the quarterly reports which are becoming more jargonistic – if that’s a word.

Maintaining an entrepreneurial flair and passionate people/product focused culture when you get to this size and are also a public company, is very hard and few achieve it. Up until now Ramirent has managed to do so while maintaining a very professional relationship with major investors and the stock market. Hopefully it has not lost that knack.