07.05.2015

Negative start for Rami

Finnish based international rental group Ramirent has posted its first quarter results, with higher revenues and a small loss.

The company saw revenues increase 2.2 percent to €140.6 million while last yea’s pre-tax profit of €3.2 million was converted to a loss this year of €215,000.

The negative number was due mainly to higher costs associated with service and repair, the revenue mix and project start-up costs. Capital expenditure in the quarter was €18.1 million, compared to €23.4 in the same period last year. Net debt increased 6.7 percent to €226 million.

Looking around the regions, Finland saw revenues improve 1.3 percent, while profits dropped 72 percent to €800,000. Sweden was the star of the show – up 12.4 percent, while profits increased 23 percent to €5.1 million. Revenues in Norway declined 8.7 percent with profits down 61 percent to €1 million, Denmark dropped 2.3 percent in revenue terms and remained in negative territory with a loss of €1.4 million. Europe East saw revenues improve 5.9 percent as it moved positive with a €100,000 profit. Finally Europe East Central declined 6.9 percent in revenue terms but substantially reduced its loss to €600,000.

Chief executive Magnus Rosén: said: “Despite a tough market in two of our key countries, group net sales increased by 5.4 percent at comparable exchange rates in the first-quarter. However EBITA margin was affected negatively by a higher share of service sales, start-up costs in large Solutions projects, reorganisation of maintenance and repair operations, as well as price pressure especially in the Finnish and Norwegian equipment rental markets. Increasing service business will be a key to generate sustainable profitable growth. Return on invested capital was 12.9 percent and return on equity was 9.7 percent, compared to the financial target of 18 percent. Our full-year outlook for 2015 remains unchanged”.

“We are not satisfied with the current profitability level. In the first quarter we continued to implement our efficiency programme developing our common operational model and processes for the whole group. Our efficiency actions will continue during 2015 and the margin improvement stemming from these actions is expected to materialise mainly in 2016 and onwards”.

“Sales growth was strongest in Sweden supported by demand from residential and infrastructure construction. In Finland, despite slow underlying demand in the construction and industry sectors, net sales grew based on good activity in small and mid-sized projects in Southern Finland, but increased price pressure and increased handling costs burdened profitability. In Norway, slow underlying demand in building construction affected net sales negatively and restructuring of the operations to improve profitability continued. In addition, the decline in oil prices impacted negatively on the demand from the Norwegian oil & gas sector. In Denmark, first-quarter market activity remained stable but a tough competitive environment and an unfavourable sales mix impacted negatively on profitability. In the Baltics, our strong performance continued driven by favourable demand among small and medium sized customers. In Europe Central, EBITA result improved compared to previous year due to favourable demand in Polish industrial projects as well as strong sales growth in the Czech Republic and Slovakian operations. In Fortrent markets in Russia and Ukraine, high political and macroeconomic uncertainty continued”.

“We are committed to achieving sustainable profitable growth by pursuing our objective Customer First through the NextRamirent agenda; by maintaining agility in business through a diversified business portfolio of products, customers, competences and geographies and by building One Company to realise scale benefits and synergies. Based on our continued solid financial position, we will also continue pursuing outsourcing opportunities and acquisitions.”

Vertikal Comment

This is not quite as bad a set of numbers as it might look, but the company is struggling a little, while the business should pick up during the year, and possibly even thrive, it still seems to be too focused on the quarterly statistics, rather than the day to day business. Get that right and the numbers will – to an extent – sort themselves- at least in a recovering market.