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Fortrent to close Ukrainian business

This time last year Ramirent and Cramo began looking into options for their jointly held Russian/Ukrainian joint venture Fortrent.

That review has been completed and the two companies will maintain their 50/50 ownership of the business, which had revenues last year of €31.8 million. However the two have decided to close the Ukrainian operation, which contributed €2.1 million to Fortrent’s revenues. The closure will occur sometime on the new year and incur a cost of around €500,000.

Vertikal Comment

It seems slightly odd that this seemingly simple business decision has taken one year review. One imagines that had a buyer been interested in paying a decent premium for the entire Fortrent business, the two owners would have jumped at the chance. One can only assume that this did not arise.

The Fortrent business dates back to 1990s when Ramirent followed Finnish, Swedish and other international contractors into the country during the heady days of Russia’s first economic boom following the demise of the Soviet Union. It agreed to merge its operations with Cramo in late 2012, with the new venture kicking off in 2013. At that time the combined revenues were €52 million – so it is clear to see that this has not been a runaway success – more a marriage of convenience.

One cannot help but feel that while the closure of the business in the Ukraine and continuing as before in Russia might solve some sensitive issues, it is not a long term solution. Will the decision last until this time next year? I doubt it somehow.