03.03.2010

€35 million loss at Cramo

Finnish based international rental company Cramo published its full year results on February 10th, they show a 23 percent fall in revenues to €446.7 million, the fourth quarter showed this decline easing with revenues falling 19.5 percent.

The group posted a pre tax loss of €34.9 million compared to a profit in 2008 of €63.7 million. €30.3 million of the year’s loss was down to one off exceptional costs such as goodwill write downs and restructuring costs.

The company says that it expects the first half of 2010 to show no signs of improvement.

The group spent €31.5 million on new equipment during the year, compared to €201 million in 2008. It says that it will spend between €30 and €40 million in 2010.

By major market

Finland had revenues of €92 million down 27 percent on 2008, while operating income was €10.7 million a fall of almost 60 percent.

Sweden, the group’s first and largest market saw revenues declined 21 percent to €215.7 million while operating income fell 42 percent to €36 million.

Norway posted sales of €63.4 million a drop of just nine percent while operating profits fell 33 percent to €4 million.

Denmark reported a fall of just over 18 percent to €36.3 million with an operating loss of €8.8 million compared to a loss of €2.9 million in 2008.

Central and Eastern Europe saw revenues fall by almost 44 percent to €44 million with a loss of €17.6 million compared to a profit of €9.8 million in 2008.The loss in this region is largely due to problems in the Baltic states and Cramo has reacted by cutting its workforce by 60 percent and merging its Latvian and Lithuanian operations while closing or ‘privatising’ 20 of its locations.

Cash flow remained strong and interest bearing debt was reduced by almost 20 percent to €383.7 million.

Vertikal Comment

Cramo is always compared to its fellow Finnish competitor Rami Rent which appears to be managing the downturn more positively. Cramo’s business is being hampered by ongoing profitability problems in Denmark, in spite if the fact that it has a strong presence and is probably the third largest rental company there.

Also its Central and Eastern European operations have been far too dependant on the Baltic states where a wave of Euphoria led to gross over-expansion of the rental sector in what will always be small markets, due to their size in terms of population, geography and underlying economic factors.

The Swedish and Finnish businesses are very strong, being the core operations of the two large companies that came together to create the current Cramo business. There is still much to be done to build similar operations in other countries and it would not be a surprise if some shareholders began to lobby for the company to pull back to its Nordic roots?