08.05.2014

Poor start for Ramirent

Finnish international rental company Ramirent saw profits plummet in the first quarter on sales down 10 percent.

Total revenue came in at €137.5 million, 10 percent below the same period last year, while pre-tax profits dropped over 78.8 percent to €3.2 million. Gross capital expenditure was reduced to 27 percent to €23.4 million, while net debt was reduced by almost four percent to €212 million.

Chief executive Magnus Rosén said: "Demand for equipment rental remained mixed in our core markets during the first quarter of 2014. First-quarter net sales decreased by two percent at comparable exchange rates and adjusted for transferred or divested operations. The EBITA margin is not at satisfactory level and we will prioritise measures to strengthen profitability. Efficiency improvement measures were intensified in the first quarter.”

“Markets developed largely in line with our expectations in the first quarter. In Finland and Norway, slower construction activity impacted negatively on operations. In Sweden, net sales decreased mainly due to some larger projects ending in the first quarter. The demand for equipment rental improved in Denmark, Poland and the Baltic States in the first quarter based on increasing construction activity and stable demand from industrial sectors.”

“We remain focused on improving efficiency and our competitive position. Implementation of specific actions to reach the targeted group EBITA margin level of 17 percent by the end of 2016 continued in the first quarter. Integrated solutions provided to all customer sectors and improved operational excellence through the common Ramirent platform are key measures to reach the goal. We are improving pricing management, optimising a customer centre network, improving fleet utilisation rates and the governance of sourcing operations.”

“In the first quarter we also announced a renewed brand promise: Ramirent is More Than Machines. Our new brand promise clarifies our value proposition of delivering sustainable solutions that offer efficiency improvement possibilities to our customers through the competence and experience of our people combined with high quality equipment and the right services. We continue to work on improving our customer understanding and maintain high focus on developing our capabilities in the areas of safety and eco-efficiency solutions.”

“In the first quarter we acquired a telehandler business in Finland whereby we complemented our product range and also extended our service offering by signing a cooperation agreement to provide telehandler operator services. Based on our strong balance sheet, we continue pursuing outsourcing opportunities and selected small− to mid−sized acquisitions as well as evaluating entry to new customer sectors and geographies in 2014."

Vertikal Comment

Having performed exceptionally well through most of the recession Ramirent appears to have lost its way a little, just as some of its key competitors appear to have rediscovered theirs. Magnus Rosén is a highly experienced operator but the statement above includes a fair chunk of business jargon that will confuse most employees and customers, and sets warning bells ringing. Hopefully the Finnish or Swedish versions are more plain speak.

Ramirent is a great company and certainly a focus on rental rate discipline, improved customer service and utilisation are critical, but the last couple of reports give a sense that the company has gone into a semi defensive mode, when perhaps this point of the economic cycle is better suited to attack and inspiration?