29.10.2015

Cramo’s rise continues

Finnish international rental company Cramo has reported a more modest result for the third quarter but its string upward trend continues.

Total revenues for the nine months were €486.7 million two percent up on last year, with pre-tax profits jumping 44 percent to €42.5 million. Capital expenditure for the period was almost 10 percent higher at $125.8 million.

Looking at the third quarter revenues increased by less than one percent to €125.8 million with Finland, Sweden, and East Europe all posting healthy gains, offset by a 22 percent drop in Norway, with Denmark and Central Europe down four and 1.5 percent respectively. Operating profits were flat- marginally lower than in the same period last year, largely due to a 25 percent drop in Norway and a smaller fall in Eastern Europe. Finland and Sweden both posted respectable profit growth, while Central Europe- which includes Germany - almost tripled profits and Denmark doubled its performance. Both from a low base of course. Pre-tax profits overall were marginally down at €24.6 million.

Chief executive Vesa Koivula’s said: “Rental markets continued to gradually strengthen in Cramo’s main market areas. In the third quarter of 2015, Cramo group’s sales growth and profitability improvement continued. Our sales grew in local currencies by three percent and our EBITA margin before non-recurring items improved from 17.8 to 18.2 percent. We achieved a particularly good result in Finland, despite the difficult market situation in new construction. In Central Europe the result improved clearly but remained below the target level. Profitability also improved in Sweden and Denmark. In Sweden we took further performance improvement actions during the third quarter and I believe that the actions carried out will bear fruit going forward”.

“In January to September our sales grew in Finland, Sweden and Eastern Europe amounted to €480.7 million. In local currencies, sales grew by 4.6 percent. Our EBITA before non-recurring items improved by 26.6 percent and also relative profitability developed favourably”.

“We completed performance improvement actions throughout the entire group, particularly with regard to materials and services, whose share of sales decreased as planned during the period under review. In addition, the adoption of our Performance Management Model will further improve our productivity, and I believe that ‘For a great day at work’ and our customer promises related to the Cramo Story programme contribute to strengthening our position as the first choice for customers”.

“When I took up the position of chief executive at the beginning of 2004, our company was just beginning to turn its gaze beyond Finnish borders. During the past 12 years, as a united Cramo team we have increased the sales of our group approximately nine fold and achieved a leading position in the European equipment rental and modular space markets. I am happy and proud to be leaving a healthy and growing Cramo to my successor Leif Gustafsson”

Vertikal Comment

While the overall group third quarter numbers are not something to get too excited about, the underlying story is quite different with some of the more challenging parts of the company showing strong signs of finally turning the corner and bouncing back quite strongly. Norway is clearly having a negative effect on the group, but this is a business much easier for a Nordic based group to deal with than Central Europe.

The company also appears to becoming a little over infatuated with modular space/cabin rental – if its recent results discussions are anything to go by. If this is the case then it must be aware that its network and business is set up as a general rental company, and that this balanced offering to customers has been the driving force behind the strong growth of the past decade or so.

That aside, this is a good result and bodes well for the company in 2016