11.11.2009

Rami drops 31%

Finnish based international rental company Rami Rent has reported third quarter revenues of €129.5 million, down 31 percent on the same period last year. Pre tax profits for the quarter fell 72 percent to €7.6 million.

Looking at the nine month year to date numbers revenues slipped 29 percent to €376.3 million while pre-tax profits shrunk by 76 percent to €19.9 million,

Most of Rami's markets posted drops of around 25 to 30 percent, apart from its home market Finland which was down just 10 percent and Eastern Europe, which includes Russia and the Baltic states, where sales were down 42 percent. Even allowing for currency fluctuations revenues in the region dropped 36 percent – due to a very rapid fall in the Baltic states where Rami has a strong position.

During the past nine months the company has cut costs, shedding 21 percent of its staff and 17 locations. It now has 3,177 people at 344 locations.

Capital expenditure has been negligible with just over €10 million spent over the nine months compared to €204 million in 2008.

Sales of used equipment from the company’s fleet €15.4 million compared to €18.1 million for the same period last year.

Net debt has bee cut from €362 million to €230 million. Net
debt amounted to EUR 230.0 (362.4) million dramatically reducing the group’s gearing.

Chief executive Magnus Rosén said: "Market conditions continued to be weak in the third quarter. Our primary focus continued to be on right-sizing operations and safeguarding profitability. Our cost saving initiatives advanced according to plan and we continued to right-size and re-allocate our rental fleet. In the current economic environment, it is satisfying to see that we were able to deliver a healthy cash flow and improve our financial position also in the third quarter. We estimate that the fourth quarter 2009 and the full year 2010 will be challenging. Our priorities in the current market remain on cost and cash flow management as well as preparing for capturing opportunities in the recession."

Vertikal Comment

Rami has seen its revenues fall further than its principal competitors, including fellow Finns Cramo, which recently reported revenues down 24 percent year to date.

However Rami has performed far better when it comes to profitability, with Cramo posting a loss for the first nine months.

However Rami will need to keep an eye on its fleet which at the current level or expenditure and disposals will quickly start to look long in the tooth. Rami has been here before – it struggled for years in the mid 1990’s after having overdone the aging of its fleet during the recession of the early 1990’s.

Having said this, Rami did need to reduce its gearing and debt load, and it has made strong progress, if it can maintain this over the next six months it will be in a good position to start growing again from the second half of 2010.