12.02.2015

Ramirent profit slide

Finnish international rental company Ramirent has reported a full year decline in revenues of just over five percent, while fourth quarter profits were halved.

Total revenues for the year were €613.5 million, 5.2 percent down on 2013, while pre-tax profits declined over 28 percent to €42.5 million. Looking at the fourth quarter, revenues were 4.1 percent lower at €160.7 million, pre-tax profits however were half the levels of 2013 at €6.4 million.

Total capital expenditure for the year was €144.6 million, almost 15 percent higher than in the previous year, although expenditure in the fourth quarter was cut back to €19 million, 44 percent down on the same period in 2013. Net debt at the end year was up almost 10 percent to €227.1 million.

Chief executive Magnus Rosén said: “Our fourth-quarter net sales declined by 1.6 percent at comparable exchange rates compared to the previous year. Increased geopolitical uncertainty and slow economic growth in our main markets, combined with the rapid decline in oil price, impacted negatively on net sales. Fourth-quarter EBITA decreased to €14.5 million including €3.7 million of restructuring costs and asset write-downs. In the fourth quarter, cost reduction measures continued and we held back on investments in the rental fleet and delivered a strong free cash flow of € 32.6 million."

Vertikal Comment

This result is pretty much in line with expectations and possibly not quite as
bad as many were expecting. The company is being non-committal on 2015, saying that it will most likely be similar to 2014. One senses that it is waiting for the economic situation to improve rather than being a little more pro-active.

Ramirent is a great company and grew rapidly over many years in terms of revenues and profits, but from an outsiders view it now seems to be too focused on how everything will look in the quarterly financial reports and on economic and construction industry forecasts. This is rarely a good recipe for strong growth and a dynamic business. Changes are being made to improve efficiency and add some customer orientated improvements but it all seems a little soft and low key, lacking in real inspiration and excitement. But of course this is just one point of view from an external observer.

Perhaps the new slimmed down structure and some new blood on the board will help reinvigorate what is still a very strong and profitable business. We certainly hope so.