Record revenues for Loxam but lower profits

Loxam has published its third quarter results with year to date revenues 17 percent higher at €1.28 billion a new record thanks to one quarter contribution from Ramirent.

Looking at the detail Loxam’s French general rental operations posted revenues for the nine months to the end of September of €506.9 million up 5.3 percent on the same period last year with an operating profit of €180.1 million up nine percent.

Loxam’s French specialist rental businesses saw revenues increase seven percent to €180.4 million with operating profit of 60.2 million up two percent on last year, and finally nine month revenues for the international division were 35 percent higher at €596.8 million with an operating profit of 188 million up 29 percent, with UK Platforms contributing a full nine months of revenues and profit. .

Group pre-tax profits plummeted 49 percent in the nine months to €51.4 million, due entirely to higher depreciation and finance costs.

Moving on to the third quarter, group revenues were 38.5 percent higher at €523.6 million, made up of French general rental revenues up four percent to €170.4 million, with operating profits three percent lower at €61.4 million. The company’s French specialist rental businesses posted revenues of €64.4 million up 6.5 percent on last year, with an operating profit 28 percent higher at €23 million. The international division benefited from the full three months contribution from Ramirent, boosting revenues by 88.1 percent to €288.8 million – meaning that for the first time in its history Loxam has generated more revenues outside of France than from within. Operating profit for the International division was 84 percent higher at €99.3 million.

Group pre-tax profits in the third quarter were €26.3 down 37 percent on the same quarter last year.

Year to date gross capital expenditure was two percent down on last year at €315 million, with a much steeper cut in the third quarter – 35 percent lower at €59 million, while net debt increased to €3.73 billion due to the cost of acquiring Ramirent.

Chief executive Gérard Déprez said: “We are extremely satisfied with the results of our third quarter, underlining the dramatic transformation of the Loxam Group thanks to the acquisition of Ramirent which we started to consolidate in the Group’s accounts since August 1st , 2019. The rental market has remained positive overall and our organic revenue has continued to grow by 2.2 percent, while our EBITDA margin has stayed strong at 35 percent with a balanced performance at all divisions."

"I am also pleased that the group delivered a significant positive free cash flow for Q3, as we benefited from our EBITDA growth and reduced spend in capex, as most of the fleet capex for our French business were delivered during the first half of the year. We anticipate that most of construction markets will remain positive for Q4, while the level of demand will adjust to the seasonal slowdown towards the end of the year. As most of our capex for 2019 have been paid, we anticipate that our strong EBITDA will contribute to a decrease of our financial debt towards the end of the year.”

Vertikal Comment

The Ramirent acquisition can be seen now to be even more transformational than expected, based on these numbers Loxam looks set to achieve revenues in 2020 of €2.1 billion. Although profits will be under pressure due to the huge debt the company has taken on to pay for its acquisition spree. It will also have to keep an eye its apparent policy of using a capital expenditure squeeze to conserve cash flow in order to pay down debt.

With market uncertainty in many of the markets in which it operates Loxam will need the full support of its shareholders.