18.03.2020

26% jump for Loxam

French international rental group Loxam has reported a year of strong growth in terms of revenues, with total sales up 26 percent to €1.87 billion for the full year, mostly thanks the Ramirent acquisition. On a like for like basis the increase would have been 1.9 percent.

The company breaks revenues down into three categories, French General Rental which totalled €681.5 million - up almost four percent on the year. French Specialist Rental at 242.8 million – up more than six percent, and International revenues of €947.2 million, representing over 50 percent of group revenues for the first time in the company’s history and almost 59 percent higher than in 2018.

Group pre-tax profit dropped 26 percent to €81.3 million, affected by higher interest costs, including non-recurring costs of €28 million for a call premium paid in April and bridging loans for the Ramirent acquisition. Without those additional costs, profits would have been flat. Earnings before interest and tax were almost 11 percent up on the year at €235.3 million.

In the fourth quarter revenues improved 52 percent to €587 million, made up of France General Rental of €174.6 million just marginally higher than in 2018, France Specialist Rentals of €62.3 million, up five percent on the same quarter in 2018, and International revenues of €350.4 million up 127 percent on last year.

Gross capital expenditure for the year came in at €383 million down almost 7.5 percent on 2018.

Chief executive Gérard Déprez said: “2019 has been an outstanding year of transformation for the Loxam group. Thanks to the acquisition of Ramirent we have created a pan-European leader in equipment rental with attractive positions in the main European markets. The economic conditions have remained positive throughout the year enabling the group to grow organically for a fourth consecutive year. In France, we are pleased to have established the benchmark for organic growth in the profession with an annual organic growth rate of 4.5 percent in 2019 and a three year organic growth rate of 6.3 percent.”

“On a pro forma basis, including a 12 months contribution from Ramirent, our revenue reached €2.3 billion with an EBITDA margin of 31.8 percent before synergies.”

“Thanks to a strict financial policy, we have started to reduce our indebtedness and already generated a positive free cash flow before M&A. We are also extremely proud of our progress on the implementation of our CSR policies as we achieved 75 percent of our 20 goals set for 2019. Among these targets, we managed to reduce even further the number of accidents of our workforce, obtained an ISO 45001 certification which reviews our policies in terms of health and safety, and increased our investment in low GHG emission equipment.”

“We will monitor closely the situation regarding Covid-19, which at the end of February has had no major impact to our operations. Our liquidity is high, and we have no major debt repayment in the year.”

Vertikal Comment

At first glance the Ramirent acquisition looks as though it could be highly positive for Loxam, although it is early days and the world has entered a totally uncertain period which could last most of the year and cause a deep recession.

Having said that Loxam has become a true European rental power house and has the potential to build organically on this over the next few years. Its biggest challenges will be to turn around those Ramirent divisions that were beginning to struggle in the past year or so and avoiding the temptation to starve the fleet of capital expenditure in order to save cash to pay down its debt load.

All in all though not a bad result given the size of the acquisition.