06.08.2014

Cramo profits continue to slide

Finnish international rental group Cramo has reported a flat second quarter in terms of revenues, while profits continue to shrink.

Total revenues for the first six months were €300 million, down 2.8 percent on the same period last year. Pre-tax profits dropped 38.3 percent to €4.8 million. Only Finland, Denmark and Central Europe managed to post revenue increases for the first half – Only Finland improved profits for the period. Capital expenditure on the fleet was €69 million for the period, up from €67 million last year.

Moving on to the second quarter revenues were roughly flat at €159.8 million, while pre-tax profits fell 36.3 percent to €6.4 million. Only Finland, Denmark and Eastern Europe posted revenue increases for the quarter, and only Finland and Eastern Europe reporting improved profits With Denmark, Norway and Central Europe all reporting losses.

Chief executive Vesa Koivula said: “After a challenging start to the year, the rental market started to pick up gradually during the second quarter. The recovery was slower than we expected, but nevertheless, signs of growth could be seen in different markets. I am particularly satisfied about our performance in Finland but also with the development of demand in the Swedish and Danish markets in the second quarter.”

“Our result for the second quarter of 2014 did not meet our expectations, but I believe that Cramo Group will reach its full-year performance goals. We have performance improvement actions in place in several countries and I also expect demand for rental services to improve during the rest of the year.”

“In order to ensure favourable profit development, we decided to adjust our costs in Norway through personnel reductions and optimisation of our depot network. It is important for us to create structures that make the achievement of our financial targets possible in each individual market in the future.”

“In Central Europe, our result was weakened by the transition programme, but the result will improve during the second half of the year.”

“My favourable full-year outlook for 2014 is based not only on market forecasts, but also on our determined operational development over the past few years. We will continue to strengthen our customer focus in all of our countries of operation. We have also developed our pricing models and solutions, so that we will be able to make use of opportunities as soon as the rental market resumes growth. Although the second half of the year is associated with uncertainties, I expect Cramo Group’s sales to grow and our profitability to improve during the rest of the year.”

Vertikal Comment

Cramo continues to struggle but does seem to be benefiting from the major changes to its Eastern European operations which include the merging of its Russian operations with Rami Rent’s into Fortrent. Its German operations are still bleeding red ink but the company is focusing on the longer term here and may well ‘turn the corner’ as we head towards the end of the year.

While Cramo remains marginally ahead of fellow Finn Ramirent in terms of revenues, the cost of ongoing restructuring in many of its operations means that it lags way behind in terms of profitability and is investing less on refreshing its fleet.

What it does show is how challenging it is to keep these large rental groups growing positively across in Europe, with its wide variations in culture and currencies etc…