29.10.2014

Cramo decline continues

Cramo, the Finnish international rental group, has reported a weak third quarter as previously warned.

Total revenues for the nine months were €471.2 million, 2.3 percent down on the same period last year, while pre-tax profits declined 12.7 percent to €29.6 million.

Looking at the third quarter itself, revenues slipped just 1.4 percent to €171.1 million, although currency exchange was also a factor in the decline, meanwhile pre-tax profits slipped 5.1 percent to €24.8 million. The company says that in spite of the weaker results, all divisions are now showing positive results, apart from its Fortrent joint venture in Russia which has gone the other way.

Chief executive Vesa Koivula said: “In 2014, the European economies have recovered slower than anticipated, which has affected the demand for equipment rental services. Cramo´s euro-denominated sales for the first nine months were slightly lower than last year. However, sales grew in local currencies, excluding restructuring in Russia, by 2.1 percent.”

“In the third quarter, all business segments achieved a positive result. Still, Cramo Group’s profitability was slightly below last year. The upward turn in the Swedish market occurred later than we anticipated and the transition programme in Central Europe has not fully performed according to our expectations.”

“The key near-term initiative in Central Europe is a sales increase in new product areas and lowering our cost base. In Sweden, the result development has not yet met our high expectations, but results in the latter part of the third quarter indicate a favourable development during the remainder of the year. In Finland, our business operations continued to develop positively despite the weak market situation. In Norway, our performance improvement programme has proceeded as planned. In Eastern Europe, profitability improved with the exception of Fortrent.”

“Despite profitability being slightly below last year in the third quarter, I am reasonably satisfied with our result even if the result improvement in Central Europe is delayed.”

Vertikal Comment

Not a great set of numbers from Cramo, although we were warned back in September. But at least the company did make a profit and there are signs that the German operation might now finally be coming good, while Central and Eastern European operations outside of Russia appear to be on the up.

While 2015 looks as though it should be considerably better, the company still has quite a bit to do to bring all of its components together so that they function as one highly efficient business.