06.08.2015

Ramirent bounces back

Ramirent has reported a solid increase in first half revenues and profits thanks to Sweden and some other markets.

Total revenues for the first six months were €300 million 3.7 percent up on last year, while pre-tax profits jumped almost 33 percent to €16.4 million.

Much of the growth came from a strong Swedish market where sales grew by almost 17 percent, while profitability soared 87 percent. Another strong improvement came from Denmark- up 17.2 percent, although it still lost money for the half year, edging into profit in the second quarter. East Europe improved almost five percent and central Europe was flat. Finland was up one percent by profits plummeted 40 percent, and revenues in Norway fell over eight percent, while profits declined 30 percent.

In the second quarter revenues were up five percent to €159.4 million, while pre-tax profits jumped more than 82 percent to €16.7 million. Country by country performance was largely similar to the first half.

Capital expenditure for the six months was €60.4 million, roughly 16 percent below last year’s levels. Net debt edged up 8.7 percent to €297.1 million.

Chief executive Magnus Rosén said: “Overall the second quarter developed according to our expectations. Ramirent’s second-quarter net sales grew by five percent or 6.9 percent at comparable exchange rates. Second-quarter sales grew in all segments except for Norway. Demand improved topline, especially towards the end of the quarter. EBITA growth was supported by an increase in Customer Centre sales, progress in Solutions projects as well as good fixed cost control in the operations. We continue to focus on improving the profitability level”.

“Our efficiency programme and work on the improvement agenda NextRamirent proceeded in the second quarter. We continued to develop our offering of solutions and value added services to sharpen differentiation. Among other things, we signed a letter of intent with NCC Roads to start exploring possibilities for closer cooperation in road and traffic safety. Our determined work on developing the common business platform targeted to drive efficiency and harmonise our operational model continued. We are seeing performance improving from implemented efficiency actions in particular the centralising of maintenance and repair operations, reduction of non-productive fleet and from establishing a shared service centre for financial services”.

“In the quarter, we also continued enhancing pricing management procedures and improving fleet utilisation by developing the productivity of our supply chain management. As communicated earlier, the margin improvement stemming from these actions is expected to materialise mainly in 2016 and onwards”.

“Sales growth accelerated in Sweden supported by high overall construction activity and our profitability improved as the large solution projects advanced. In Denmark, our activity levels picked up and cost reduction measures started to show results. Also in Europe Central, net sales picked up owing to an increase in construction of roads, industrial buildings and especially in Poland power plants. In Baltics, we saw continued strong performance supported by a healthy construction activity”.

“In Norway, on the other hand, our performance weakened compared to the previous year due to lower demand in residential construction as well as softness in the oil and gas sector. Demand in the Finnish market continued to be sluggish, except for Southern Finland where growth was supported by ongoing construction projects”.

“Ramirent is on a journey of change moving from a product based company to a solutions and knowledge based company with the ambition to offer a unique customer experience. We will achieve this by continuing our determined work to achieve sustainable profitable growth, improve our differentiation developing complementary services for our customers and enhance our operational productivity creating a solid foundation for competitive operations also in the future.”

Vertikal Comment

This is an encouraging set of numbers from Ramirent, which after having gone through most of the recession in good shape, seemed to have lost the plot as the market began to improve.
It is still interesting to see how its region by region numbers compare with fellow Finn-international rental company Cramo which reported a solid improvement in Finland while Rami struggled in its home market, yet Ramirent gained more from the upturn in Sweden and performed much better in Denmark.

The business jargon from Ramirent appears to have slowed a little, but it now seems to be experimenting with centralisation, at least of some services, boosting head office employees from 55 to 115. While centralising 'back room' activity can really add efficiencies – particularly within a single market, it can also destroy initiative and entrepreneurial efforts if the centralised service is too remote from the point of service or is too customer facing.

In spite of all this it is good to see Ramirent back on the growth road and as with Cramo, the timing its ideal, lets just hope it gathers pace in the second half.