01.11.2019

Negative quarter for Cramo

Finnish international rental company Cramo has reported lower third quarter sales and profits

Total revenues for the nine months to the end of September were €455.9 million, almost one percent lower than in the same period last year. While pre-tax profits slumped 32 percent to €38.9 million. Capital expenditure was cut 41 percent on this same period last year to €68.3 million.

Looking at the third quarter, revenues were more than three percent lower at €154.4 million, with pre-tax profits almost 30 percent lower at €19.9 million.
Scandinavian revenues were 8.4 percent lower at €79.6 million while operating profit was down 15.4 percent to €16 million.

Finland and Eastern Europe was marginally lower at €38.3 million a two percent fall on the same quarter last year. While operating profits slipped 4.9 percent.
Central Europe, which includes Germany, saw revenues improve 8.3 percent to €36.5 million, although operating profits plummeted 38.9 percent.

Chief executive Leif Gustafsson said: “Cramo’s third quarter was the first quarter as a standalone equipment rental company. The new strategy has new financial targets and works towards the group vision of becoming the productivity partner in rental, and beyond. The strategy aims at grasping the opportunities in the market via differentiation through products, services and innovative digital solutions aimed at increasing productivity for our customers. This will be key to our success.”

“Cramo’s third quarter performance fell behind last year, as expected, and comparable EBITA decreased in all segments compared to last year. However, the cash flow generation was very strong during the quarter and cash flow from operating activities was €16.9 million above last year.”

“To improve competitiveness and profit generation going forward, we have initiated a group wide performance enhancement programme to ensure a more streamlined cost base. The performance programme is proceeding as planned, including personnel and other operating expense reductions. The programme will be fully executed by the end of 2019 with run rate cost savings of €10 to 12 million, visible gradually from the fourth quarter of 2019 onwards, and in full effect in 2020.”

“The group’s sales in the third quarter were slightly lower compared to last year in comparable currencies. The market environment is levelling out in many countries, which makes the sales growth and profitability improvement more challenging. In Sweden, sales decreased by 8.3 percent in local currency mainly due to the ending of large industrial projects with new projects being postponed until the late autumn of 2019. However, two large projects were signed during the second quarter of 2019, which will start contributing positively from the fourth quarter of 2019. In Norway, the positive trend in sales development continued, driven by good demand, increased fleet and service sales.”

“In Finland, sales and profitability were almost on last year’s level, whereas in other Eastern European countries performance was impacted by a more challenging market environment. In Central Europe, sales were substantially higher compared to last year driven by industrial projects in KBS Infra, however profitability stayed on a non-satisfactory level.”

“We see many growth opportunities in our markets, particularly within selected customer segments and products areas where we have potential to increase presence and strengthen our market position. In the coming months, we will continue to execute our new strategy and finalise the cost savings programme. Cramo is a trusted brand with a strong product offering, loyal customers and highly engaged employees. This coupled with our new strategy will leave us well prepared for the future where we will invest in growth opportunities and optimise profitability to meet the performance guidance given for 2020”.

Vertikal Comment

This is not a great set of results from Cramo, there are numerous factors though that make comparisons with last year tricky and not entirely meaningful. But the company does appear to be losing some momentum as it implements what looks as though it might became an overly ‘corporate’ strategy that focuses too much on quarterly reports rather than customers and employees. The heavy reduction in capital expenditure this year is hopefully not an early indication of this.

It will be interesting to see how the year ends up.