06.11.2014

Better quarter for Ramirent

Ramirent the Finnish international rental group has reported slightly improved results for its third quarter.

The year to date numbers are still gloomy though, with revenues down 5.6 percent to €452.9 million, while pre-tax profits are over 29 percent lower than a year ago.

If we look at the third quarter, revenues in local currencies improved slightly, however when converted into Euros the net revenues for the group are down 1.6 percent to €163.6 million. More positively pre-tax profits improved 15 percent to €23.7 million.

Chief executive Magnus Rosén said: “After several quarters of decline in sales, we saw a small increase of 1.9 percent in our third-quarter net sales at comparable exchange rates and adjusted for divested operations. We intensified cost control in all our markets during the quarter and I am pleased to report an increase in our third-quarter margins from 15.6% last year to 17.1%.”

The market picture remained mixed, with no major changes during the third quarter. In Sweden, increased demand supported net sales as several projects started. In Finland, net sales were supported by recent acquisitions although overall construction activity remains subdued and we see further risk on the down-side. In Norway, modest demand for equipment rental continues from residential construction.

“In Denmark, demand was supported by construction in the capital and demand from the public sector. In the Baltics, our operations developed favourably, backed by stable market conditions. In Europe Central, demand for equipment rental improved in Poland and the Czech Republic, while market activity is low in Slovakia”.

"In the third quarter, we carried out a number of actions to adjust the cost base in low-performing segments, especially in the Swedish and Norwegian operations. In Norway, a EUR 1.9 million restructuring provision was booked in the third quarter. In Denmark, activities to streamline operations and realise synergies cross-border with Sweden continued and in Finland flexibility was added by outsourcing non-core yard and storage operations. Cost reductions will continue in the fourth quarter”.

“Other key measures comprise the development of the common Ramirent platform, allowing us to realise synergies of scale and to better manage pricing and fleet utilisation rates. Based on our continued solid financial position, we are well positioned to continue pursuing outsourcing opportunities and acquisitions.”

Vertikal Comment

This is an encouraging set of quarterly numbers from Rami, and not dissimilar to those from fellow Finn Cramo. The two companies performed very similarly in the third quarter, at least in respect to the formal results.

Rami has traditionally had a slightly more ‘hands-on’ rental industry approach from its senior management team. The wording of recent quarterly reports hint that this might be changing towards a management focusing more on the quarterly results, institutional investors and their analysts, rather than the customer and the business.

Hopefully this is not the case, as a companies that get trapped into this cycle, are usually doomed. Institutional analysts are an intelligent group of individuals, but they have no clue about running a real business, which is why they do what they do. The latest report contains quite a bit of jargon about looking after the customer etc… but this can only work if every employee absolutely believes it and has the tools and resources to deliver it.

Rami is a great company with huge further growth potential, as Europe becomes more integrated, hopefully the improvements seen in the third quarter will continue throughout the fourth quarter and into 2015.