07.11.2018

Positive quarter for Rami

Finnish international rental company Ramirent has posted modest growth for the third quarter.

Total revenues for the nine months to the end of September were €551.7 million, up 5.4 percent on the same period last year, with all five regions reporting increases. Pre-tax profits however – as reported – were 17 percent lower at €47.7 million, this however included a €31.5 million write off associated with the sale of the group’s Temporary Space division – mostly affecting Sweden, Finland and Norway. Without the cost - which is largely related to depreciation charges - the pre-tax profit would have been €78.2 million an increase of 36 percent. Net debt at the end of the period was 2.5 percent higher at €379.2 million.
Capital expenditure year to date is €153.4 million, 13 percent higher than for the same period last year. The sold $18.9 million of used equipment from the fleet – roughly the same as last year. As of the end of September, the company had a further €22.9 million of new equipment on order.

Moving on to the third quarter, total revenues were up 2.4 percent at €189.1 million, with a pre-tax profit of €4.5 million, barely a sixth of last years performance,- however without the disposal cost it was €35.1 million, a 16 percent improvement.

The regional results were made up as follows: Sweden where sales were flat, at €64.4 million, while operating profit before write offs was 21.5 percent higher at €12.7 million. Sales in Finland were also flat at €49.9 million, while operating profit was up seven percent at €9.5 million. Eastern European revenues improved 3.9 percent to €32.8 million, with a profit of €10.2 million, an increase of 12.8 percent, Norway posted sales growth of 6.9 percent to €31.1 million with operating profits of €4.1 million – up 36.7 percent and finally Denmark had sales of €11.1 million an increase of 11.4 percent while profits more than tripled to €1.9 million.

Chief executive Tapio Kolunsarka said: "I am very satisfied with our third quarter comparable results, where both our top line and especially bottom line performance surpassed our own expectations and we managed to clearly beat our previous year's tough comparison figures. At comparable exchange rates, our net sales grew by six percent, and our rental sales growth was particularly strong. Our comparable EBIT margin was 19.6 percent and comparable ROCE 16.5 percent, being above our year 2020 financial target of 16 percent. Strong customer demand in all of our markets continued in the quarter and good sales mix development and improved operational efficiency contributed to the strong margins. I am also delighted to see that our organization continues its successful efforts to improve our internal performance and is identifying further opportunities to drive productivity and margin improvements.”

“During the third quarter, we signed the agreement to sell our Temporary Space business. This transaction enables us to solely focus on our core business of equipment rental and related services and re invest capital to areas where we see higher returns. The transaction was closed on November 1.”

“All of our operating segments improved their performance - already a third quarter in a row. We posted strong performance improvement in Sweden, Norway, Denmark and Eastern Europe, all clearly improving both their comparable EBIT figures as well as their margins. In Sweden, we saw good growth across all of our regions and we continued to win several new customer accounts. In Norway and in Denmark, good market activity continued, and our internal performance efforts are becoming clearly visible. It is worth highlighting that approximately half of our comparable EBIT improvement in the quarter came from Norway and Denmark. In Eastern Europe, performance was solid across the countries. In Finland, our performance improved despite the tightened competitive environment and we were pleased with the growth rate achieved in our rental sales.”

“All in all, I am proud of our organisation's ability to execute and continuously find avenues to further improve the performance of our core business. During the quarter, we also announced changes in our Executive Management Team to increase our efforts to drive longer-term business development in Ramirent. Despite the cyclical concerns around Nordic construction markets, we remain optimistic about our possibilities to further drive internal improvements in our core business and to develop our business in the longer-term perspective."

Vertikal Comment

This is a solid performance from Ramirent and not too dissimilar overall to fellow Finnish rental group Cramo, although it has fallen slightly behind in terms of revenues and profits. However Ramirent is doing a good deal better in each of its operating businesses in terms of sales and profit growth, which bodes well for the future.

The fourth quarter will be interesting, but it looks as though the company is well set up for a good year in 2019.