05.08.2015

Sharp rise in profits at Cramo

Finnish based international rental company Cramo has reported a positive first half with a modest improvement in revenues, but a substantial boost in profitability.

Total revenues for the first half were €308.4 million a rise of 2.8 percent on last year, while profits almost quadrupled to €17.9 million.

The improvement was widespread with Finland, Sweden and Eastern Europe all showing solid revenue profit growth, In Norway revenues declined seven percent, but operating profits more than doubled. Denmark saw a nine percent decline in revenues but at the same time turned last year’s loss of €1.5 million into a profit of almost €500,000. Central Europe – largely Germany – reported flat revenues for the six months, thanks to a strong first quarter, and managed to reduce last year’s €5.8 million loss to €4.4 million.

In the second quarter overall revenues improved just one percent to €161.3 million, while pre-tax profits more than doubled to €13 million. Individual country results were similar - trendwise - to the first half, except revenues in Denmark declined over 15 percent – although it still turned last year’s loss into a profit – and Central Europe saw revenues fall almost six percent, but it also managed to improve the bottom line, substantially reducing its losses to €286,000.
The group is maintaining its full year forecasts.

“Chief executive Vesa Koivula said: “In the second quarter Cramo group’s sales growth and profitability improvement continued. The positive development started in the autumn of 2014, thanks to both our own performance improvement actions and the improved market situation. This year, the market has strengthened particularly in Sweden and in many locations in Eastern Europe”.

“In the second quarter our rental sales grew more strongly than in the first quarter, whereas lower-margin rental-related sales and trading sales decreased slightly year-on-year. According to our estimates, Cramo has gained some market share in core rental operations in several of its markets during 2015”.

“During the first half we achieved a good result in Finland in a difficult market situation and a clear result improvement in Sweden and Norway. The turn of the Danish and Eastern European operations to profit during the first half of the year is encouraging. In Central Europe, the second-quarter sales targets were not reached but the result improved year-on-year”.

“Our performance improvement actions are showing results. The group’s fixed costs were lower than last year also in the second quarter, and cost control continues to be one of our key focus areas. In order to further improve profitability, we continue the Group’s performance improvement actions in 2015, especially with regard to direct costs. With the current market outlook, I believe that Cramo Group’s positive development will continue.”

Vertikal Comment

An excellent set of numbers from Cramo, the company continues to make solid progress after years in the doldrums. It now appears to be outperforming some of its key rivals and if it can truly get on top of its Thiesen acquisition – now Cramo Central Europe – it will be doing well.
It is not the first international rental company to struggle to make a profit in Germany, the country has a knack for depriving such companies from doing well.

All in all a very good and encouraging set of numbers, with the company ‘coming right’ at a perfect point in the economic cycle.