25.10.2018

Higher revenues at Alimak

Mastclimber and hoist company Alimak has reported a positive third quarter in terms of revenues, but with weaker profits.

Looking at the nine months year to date numbers, revenues were seven percent higher at SK3.2 billion (€307 million) while order intake was up 13 percent to SK3.4 billion (€373 million). Pe-tax profits however were down 5.5 percent to SK275 million (€26.5 million).

Moving on to the third quarter, revenues were 12.2 percent higher at SK1.1 billion (€106 million) thanks largely a 13 percent growth in the Construction division – especially in the Americas and Australia - however order intake fell 31 percent due to weak performance in South East Asia and the Middle East, due to large projects drying up, rather than any loss of market share in the region. The company also says that Brexit in the UK contributed to the sharp fall in orders intake.

The rental division also made a major contribution to the overall revenue growth, with revenues up 19 percent, order intake however plunged 45 percent, which the company puts down to the fact that it is at almost full utilisation and has been cautious in investing in new equipment. The industrial sector has started to recover with revenues up three percent higher and a 60 percent jump in order intake particularly in the wind power and Oil & Gas businesses.

Chief executive Tormod Gunleiksrud said: “The performance in the third quarter of 2018 was overall good for Alimak Group. I am pleased that all business areas improved their margins from the previous year. The margin for the group is still affected by the technical challenges and delays in the previously reported handful of BMU projects and will be so also for the fourth quarter.”

"Construction Equipment reported a strong margin and revenue growth compared to the somewhat lower volumes last year. At the same time, organic order intake decreased 31 percent following a slowdown in some emerging markets and a lack of new investments in the quarter for complex projects in mature markets such as for example Canary Wharf.”

"Industrial Equipment reported a very strong organic order intake growth following improved activity levels in the market. The Wind and Oil & Gas businesses developed particularly well. The BMU business reported decent order intake in the quarter but we have not taken any larger, complex projects as focus remains on risk and margin improvement by upgrading project management and progress control with actions taken and ongoing implementation in the coming months.”

"After Sales continues to progress well with a good organic order intake growth and flat revenues. The service integration of the acquired businesses is developing according to plan and there are large opportunities to further increase the penetration of our installed base. We see great value in our service offering. To continue developing, positioning and building on this, Alimak Service was launched as a separate brand in the quarter. The brand will be used for all After Sales activity covering all end markets and has been well received by customers.”

“Rental had a decrease in order intake, the result of close to full utilisation after a strong first half of the year. At the same time, revenues grew by 19 percent and the margin remained strong with the utilisation of the fleet at near maximum levels.”

“We have a solid order backlog and are on track with the strategic direction leveraging on the service opportunities. To sum it up, I am pleased with the development and that we are on a good trajectory towards our financial targets.”

Vertikal Comment

This is certainly a much better quarter from Alimak in terms of revenues, but the group does appear to be struggling a little with the massive task of fully integrating the major acquisitions that it has made over the past year or two.

However barring an early downturn in the global economy, it ought to be able to end next year as a stronger business with a far more diverse revenue base - both in terms of markets served and geographical. However in some areas the management appears to be overly cautious with its investment strategy - and looks as though it might be focusing on the impact decisions will have on its financial reporting, rather than on the needs of its operating companies and their customers. This may well be a grossly unfair comment, but that was the general underlying impression/gut feeling that we picked up from the quarterly conference call.

The company has a first class collection of businesses and some really good people, which if given the freedom, the investment and the opportunity will bring in the good financial results. A positive bottom line comes from products and customer service provided, not the corporate office.

The next 12 months will be very interesting.