12.02.2018

Profit surge at Cramo

Finnish international rental company Cramo has reported a positive full year and fourth quarter, with substantially higher profits.

Looking at the full 12 months, revenues totalled €729 million 2.4 percent up on 2016, this in spite of several divestments - including the sale of its main rental business in Denmark and its operations in Latvia and Kaliningrad in August - offset by the acquisition of Danish cabin rental company Just Pavilion in June. Pre-tax profits for the year jumped 21 percent to €105.2 million.

Revenues for Scandinavia were marginally higher, with operating profits rising 17 percent. Finland and Eastern European revenues improved by more than three percent and increased profits by 24 percent, while Central Europe - the bulk of which is Germany - saw revenues rise by more than three percent while operating profits were more than 17 percent higher. The company now shows its Modular Space divisions separately. It had full year revenues of almost €84 million, up 10 percent on the year.

In the fourth quarter group sales were two percent higher at €196.7 million with Scandinavia slightly lower at €101.9, Finland/East Europe up three percent to almost €39 million and Central Europe up just one percent to €20.6 million. Modular Space was 10 percent up at €22 million. Pre-tax profits for the period jumped 41 percent to €28.7 million.

The improvements were led by Scandinavia, particularly Sweden with operating profits jumping 41 percent to €21.5 million, Finland/East Europe was 13.5 percent higher with a 7.3 million profit while Central Europe saw its operating profit drop 20 percent to €1.3 million.

Capital expenditure on the fleet was three percent higher at €202.2 million for the year, while net debt was reduced by just over one percent to €382 million.

Chief executive Leif Gustafsson said: “2017 was the first year executing Cramo’s new Shape and Share strategy and we took many large steps towards our vision. In the beginning of the year, we divided our operations into two standalone business divisions, Equipment Rental and Modular Space. As the synergies between the businesses are limited, we decided to further investigate and assess the potential separation of the Modular Space business. The assessment of different strategic alternatives will be carried out during 2018.”

“In 2017, we also executed several transactions following the new strategy and aiming towards a leading position in all Cramo markets. After the fourth quarter, we announced the acquisition of KBS Infra Group, which will strengthen our market position in the important German market. The acquisition is expected to close during the first quarter and to be EPS accretive already in 2018.”

“During the fourth quarter, the group’s organic sales growth accelerated, increasing by 6.3 percent, strongly supported by Sweden and we delivered good full year results with comparable EBITA of €120 million, showing an 8.1 percent increase. Equipment Rental division’s full year result was strong, driven by good market demand - organic sales increased by four percent and comparable EBITA improved by 13.2 percent. In Modular Space, we had a high number of deliveries in the latter part of the year, which resulted in strong sales growth. However, the division’s profitability was burdened by organisational restructuring and additional cost provisions particularly during the fourth quarter. Positive effects are expected to follow in 2018 due to steps taken in forms of reorganisation activities and improved project management.”

“Looking ahead, the outlook for both business divisions is positive and I expect the demand to stay on a good level in 2018.”

Vertikal Comment

Another sold result from Cramo, which looks to be gaining some real momentum. The company has very similar revenues to its major Finnish rival Ramirent but is substantially more profitable these days. However, its pace of growth is weaker, in spite of the fact that they cover most of the same markets. They certainly have different strategies and Cramo’s is certainly the more lucrative at the moment.

Cramo does appear to be taking very positive steps to simplify the business structure and reduce non productive centralised overheads and bureaucracy. It looks as though 2018 will be a very positive year for the company.