12.02.2009

Ramirent up 11%

Finnish based international rental company Ramirent, has reported its full year 2008 results, which show revenues up 11 percent to €703 million while pre tax profits dropped 65 percent to €51 million.

The results were hit by a poor fourth quarter coupled with large write off and restructuring charges. As a result fourth quarter revenue was down four percent while the business recorded a pre tax loss of €33 million, compared to a pre tax profit in the fourth quarter of 2007 €43.5 million.

Capital expenditure for the year was €201 million, down seven percent on 2007, while spending on the rental fleet totalled, €165 million, over 20 percent lower than the prior year.

Total employees at the end of the year was 3,894 down from its average for the year of over 4,000 and 200 above year end 2007.

On an annual basis all of the company’s regions performed well in terms of revenues, although Norway and Denmark were relatively flat. Business in the Baltic states of Latvia, Lithuania and Estonia was hit badly after several good years and pulled down strong performances in the rest of the East Europe division.

Magnus Rosén, president and chief executive since January 15th, said:

“In 2008 the economic slowdown spread into most of our operating markets. Ramirent's growth for the full year 2008 exceeded 10 percent, but Q408 broke the quarterly growth trend that has continued for several years. Profitability declined overall due to the weakened markets, especially in Europe East, Denmark and also in Norway.”

“Actions have been taken to generate €50 million in annual fixed cost savings for the Group. Unfortunately, this also means that personnel adjustments are necessary. We estimate to reduce a total of 600 employees from the Group's workforce.”

“Investments in new capacity have been halted and focus lies on
optimising fleet re-allocations between our countries to support utilisation and price levels. On 15 January 2009, the Group Management structure was also amended to shorten the decision-making paths and drive higher synergies between our operating countries.”

“While we will continue to execute our long-term growth strategy, we are now entering a stabilisation phase where priority is given to cash flow and profitability to preserve a strong balance sheet. This is clearly our top priority in the current economic environment.”

“A challenging year lies ahead, but we are prepared to take action and move quickly, when this is called for. Our financing is secured and contingency plans are in place in all countries in the event of a further market decline and changes in demand. As visibility for 2009 is very low, risk minimising and cost control remains high on the agenda.”

Ramirent states targets

Ramirent has also issued a set of financial targets that it says all areas of the business will focus on.

They include earnings per share growth of at least 15 percent per annum and a return on invested capital of at least 18 percent.

In addition, a gearing target of less than 120 perent at the end of each financial year was set for the first time at Group level. Ramirent's will also adopt a policy to distribute at least 40 percent of annual earnings per share to the shareholders.

Vertikal Comment

No surprises here, all in all this is not a bad result from Rami, its challenge, as with its main competitor Cramo, will be to efficiently move equipment between countries while keeping morale high and cutting costs. It will rely very heavily on its country managers to maintain a positive outlook and continue to seek out new business that in most of its markets is still there.

Its geographic spread should bring it through the recession in good shape, it will though need to keep an eye on the average age of its fleet and make sure that it does not fall into the trap it faced in the mid 1990’s, when several hard years in Finland left it with an old and unbalanced fleet that put it at a major disadvantage. It took the company a number of years and heavy expenditure on acquisitions to get out of that situation.