Strong Loxam prepares for slowdown

Looking back at a ‘major year of transformation’, European rental giant Loxam has recorded a solid performance in 2019, helped by the acquisition of Ramirent, though it is preparing for a slower market.

Although the Covid-19 coronavirus pandemic has not affected the company’s financial performance to date, Loxam said it is monitoring the situation closely and it has adapted its organisation to continue to serve some customers and protect its employees.

The shutdown caused by the virus will be managed as an ‘unusual winter distruption’.

Gérard Déprez, Chairman and CEO of Loxam, said, “Our liquidity is high and we have no major debt repayment in the year.”

Group revenues for the full year were up 26.3% to €1.87 million, though on a like-for-like basis revenues rose by 1.9%.

In the fourth quarter, Loxam’s revenues remained flat on a like-for-like basis, while Ramirent’s revenues declined by 1.9%.

Déprez said, “2019 has been an outstanding year of transformation for the Loxam Group. Thanks to the acquisition of Ramirent, we have created a pan-European leader in equipment rental with attractive positions in the main European markets.

“The economic conditions have remained positive throughout the year enabling the group to grow organically for a fourth consecutive year.”

Loxam’s Specialist France division saw a significant rise in revenues of 6.2% to €243 million. This was attributed to capex spent to expand the fleet. In the fourth quarter, revenues were up 4.9%.

The company’s International division grew by 58.3% in 2019 to €947 million. Though, on a like-for-like basis, its revenues actually dropped by 2% due to a challenging market in the Middle East.

During the fourth quarter, the International division’s revenues saw a 3.5% like-for-like fall, with Ramirent’s revenues dropping by 1.9% on a like-for-like basis, due to a dip in the Swedish construction market.

Loxam’s EBITDA (earnings before interest, taxes, depreciation and amortization) came to €609 million in 2019, up 21.6% from the €500 million recorded in 2018. Though, on a like-for-like basis, it was level. The EBITDA margin remained solid at 32.5% of annual revenue.

During the fourth quarter, EBITDA rose by 38.7% to €179 million.

Notably, the International division posted a 47.4% increase in EBITDA, boosted by the contribution of Ramirent, but on a like-for-like basis it in fact dropped by 8.1%, due to challenges in the Middle East.

Gross capex on fleet fell by 7% to €383 million in 2019. The decrease in capex was more pronounced in the fourth quarter, with a fall of 37%.

Déprez said, “Thanks to a strict financial policy, we have started to reduce our indebtedness and already generated a positive free cash flow before M&A [mergers and acquisitions].

“We are also extremely proud of our progress on the implementation of our CSR policies as we achieved 75% of our 20 goals set for 2019. Among these targets, we managed to reduce even further the number of accidents of our workforce, obtained an ISO 45001 certification, which reviews our policies in terms of health and safety, and increased our investment in low GHG [greenhouse gas] emission equipment.”

Looking ahead to the rest of 2020, Loxam is expecting to see a gradual slowdown in the construction sector and, more generally, in the economic environment.

For this reason, the company plans to manage its costs strictly and to further lower its capex.