26.10.2016

Rami clean up

Finnish international rental company Ramirent has warned that it is taking some substantial write downs which will affect its third quarter results.

The asset write downs and restructuring costs will have an impact of around €21 million on pre-tax profits, they include:
- €6.7 for “refocusing the Temporary Space business in Norway”
- €2.2 million from the “negative impact from Swedish Solutions projects”
- €700,000 of other reorganisation costs
- €10.9 million “from discontinuing planned roll-out of the common ERP-system outside of Scandinavia”
- €500,000 of reorganisation costs in Europe Central

The company confirms that all the above comes from its restructuring plans For 2017 which include:

1. Refocusing the Temporary Space business in Norway.
2. Reorganising parts of the Solutions business in Sweden and Europe Central’s business where profitability has been unsatisfactory.
3. Cost reduction in IT development and external materials and services spend.
4. Improving sales mix through an increased focus on the core General Rental Business.
5. Improving pricing through simplification and more effective pricing management systems.

Chief executive Tapio Kolunsarka said: ”To improve performance we will take determined actions to reorganise non-performing parts of our business and start driving improved sales mix and productivity. In the long-term we see solid potential to grow and improve profitability in all of Ramirent’s segments by optimising the business platform, which has been built in the past years. However, in the near future we stay focused on putting our basics systematically right and delivering improved profitability.”

Vertikal Comment

This looks very much like a new chief executive having a good sweep out before he really gets started, See change at the top for Rami. Kolunsarka offically started with the company on August 8th, taking over from Magnus Rosén who has now left the business.

He is certainly working at a decent pace and will be focused mostly now on making sure that he has a clean slate from which to kick off the new year, for which of course he will be entirely responsible. Some of his public statements - such as those on unsatisfactory profitability and better price management systems being required - are very bold for a manager who has barely two months experience in the industry, having come from the self-adhesive label market. But it has to be remembered that he started out as a management consultant with McKinsey.

However his bold statements are also refreshing in that he seems to have a clear plan, and by having a good clear out before year end, he is sweeping away any excuses for a lack of performance next year. And his statement on pricing discipline is a breath of fresh air in an industry where pricing discipline is dire at all levels and on a global basis. Hopefully he really can make a difference in this area and that others will then learn from him.

It will be very interesting to see how this pans out, by being so upfront he has set the bar high for himself. And there is nothing wrong with that.
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Tapio Kolunsarka