26.07.2018

Steady growth at Cramo

Finnish international rental company Cramo has reported a solid first half with higher sales and profits.

First half revenues increased 6.9 percent to €364.3 million, aided by acquisitions, including KBS Infra which contributed €11.6 million, and the adoption of IFRS 15 standard which added €7.4 million. Some of this though was offset by the sale of the company’s Danish Latvian and Kaliningrad operations which removed €12.2 million of sales, while exchange rates shifts removed a further €10 million or so. Organic growth was reported to be 8.6 percent led by Scandinavia rental and the Modular Space division. Pre-tax profit for the period was 12 percent higher at €44.4 million.

In the second quarter revenues increased 6.2 percent to €189 million, with a positive contribution from all regions and divisions. Pre-tax profits for the period were 26.9 million and increase of 13 percent on the same period last year.

Chief executive Leif Gustafsson said: “We delivered a good first half year result with organic sales growth of 8.6% and comparable EBITA increasing by 13.9 percent to €54.1 million. The market environment has remained solid in both of our business divisions, being particularly favourable in the Modular Space business and in several Eastern and Central European countries in Equipment Rental. We were able to continue the positive trend in group’s profitability improvement and the comparable EBITA margin increased from 13.9 to 14.8 percent.”

“The good first half year result for Equipment Rental division was again driven by the Scandinavia segment. Despite the gradual growth slowdown in the new residential construction market in the Stockholm area, sales increased by 9.3 percent in local currency in Sweden supported by large ongoing industry construction projects. We have also been capturing the good market momentum in several Eastern European and Central European countries, which showed double digit sales growth and improved profitability. Germany and Finland did not meet our targets, as modest sales performance impacted negatively on the result. Actions are taken to improve profitability going forward.”
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Leif Gustafsson

"In June we announced the agreement to acquire the Nordic Modular Group Holding. NMG is an ideal complement to our current modular space business operations, strengthening our competitiveness in the Nordics and creating a platform for further international expansion. The transaction is expected to be concluded by the end of the year. We are also investigating the separation and potential demerger of the Modular Space division. This assessment continues and will be carried out during 2018.”

“According to the current equipment rental market outlook, I expect stabilising growth for the second part of the year. However, the country specific variances in the equipment rental market are large, slowing growth pace is anticipated for Sweden and Finland, offset by brisk growth in the Eastern European countries. The outlook for the modular space market remains positive.”

Vertikal Comment

Not a bad first half from Cramo, the business has gone through quite a few changes in the past year but underlying organic growth is positive and all areas are now contributing to revenue growth, if not higher profits. Although this is likely to change as the year progresses with changes made in the German operation.

The upcoming demerger of the cabin and modular space business is interesting and will be one that others will be keeping an eye on as it progresses.
All in all a positive and encouraging result.