Catch-up: Euroloc's managing director Jorge Perelli, talks to Murray Pollok

15 April 2008

A Manitou telehandler in Euroloc colours. Euroloc says it will remain in the non–operated rental bus

A Manitou telehandler in Euroloc colours. Euroloc says it will remain in the non–operated rental business.

Spain's Euroloc is investing heavily in aerial platforms as part of its ambitious growth strategy for the coming five years. MURRAY POLLOK spoke to Jorge Perelli, Euroloc's managing director.

When Madrid–based Euroloc was acquired last year by private equity firm Advent International, it served to highlight both the continued remarkable growth in Spain's rental market, and the start of a new era for Euroloc, during which it hopes to match the rapid growth of its main competitor in the country, GAM.

“It's a new step for us”, says Euroloc's managing director, Jorge Perelli, “And it's very important, because with Advent we will be able to achieve our business objectives sooner. The project is to be the most important rental player in Spain in equipment without operators.” The 'without operators' qualification is important, since its biggest competitor and current Spanish number one, GAM, is heavily involved in the crane rental sector where drivers are supplied as standard.

Rental turnover last year was €72 million, and the target is to grow that to €130–140 million by 2009, with the usual mix of Greenfield openings and acquisitions.

Acquisitions could well be important. “We are looking for companies that have the same type of equipment as us, and in regions where we are not working”, he says, “Also, in some cases, companies that work with equipment that we don't have, or are not strong in, like aerial platforms and events.” One or two acquisitions are definitely on the cards this year.

It is aerial platforms, however, that will be a particular target for the company. “It's a market that Euroloc started late in – two years ago”, says Mr Perelli, “Now we have 400 platforms and we are planning to make some acquisitions, or increase a lot our capital expenditure.”

Mr Perelli said as much as 40% of its spending could be on aerials this year, depending on progress with acquisitions. The company will invest around €30–40 million on equipment in 2007, slightly less than in 2006, which could mean as much as €16 million on access.

Scaffolding, meanwhile, will not be part of the Euroloc–Advent partnership, since the acquisition did not include the MAI scaffolding business, which is remaining under the ownership of Euroloc's former shareholders.

In addition, to expanding the access fleet Euroloc will also fill in gaps in its 29 location branch network in Spain. These gaps are in areas such as Aragon, the Basque region in the north and La Riocha.

Euroloc's growth over the past four years has been equivalent to 19% each year, a fearsome rate. Managing to maintain and even increase this will be challenging, of course, all the more so because Spain's building and construction sector is likely to slow down, particularly the residential sector.

“The construction boom is going into equilibrium”, says Mr Perelli, “We expect in the future that the civil works will grow, new residential construction will decrease, and there will be a small increase in repair and refurb activity.”

Housing fall

Spain's current building and construction market is dominated by new residential construction, which represents around 35% of total activity. Mr Perelli says he anticipates this falling to around 25%, in line with other European countries.

Still, for the moment, levels of demand are high, and this is reflected in Euroloc's utilization figures, which are hovering around the 75–80% level. “Some regions are busier than others, but at the moment the average is 80% – it's high. It is 90% in Madrid for us at the moment.”

Advent's involvement, meanwhile, won't just be financial. Its market influence – it manages €8 billion worth of funds – has helped it bolster Euroloc's management team. Emilio Cebamanos, ex–chief executive of Spanish construction company FCC, has become non–executive chairman, and Miguel del Campo, a former chief executive officer of Lafarge in Spain, has joined as a non–executive director.

Euroloc will need all the management expertise it can get if it is to meet its targets, and some will question whether now is the right time to invest heavily in aerials following five years or more when the Spanish access fleet has been growing rapidly. Still, if your aim is to be a major rental player, it's difficult to do without aerials.

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