Challenging first quarter for Cramo
By Euan Youdale09 May 2014
Cramo Group’s consolidated sales decreased by 5.6% to €140.3 million in the first quarter of this year. In local currencies, sales decreased by 1.8%.
A factor behind the drop in sales was the transfer of its Russian operations to the Fortrent joint venture at the beginning of March, which amounted to 1% of the local curreny decrease.
The mild winter had a favourable effect on sales in central Europe. However, the low demand for heating services in the Nordic countries caused decreased sales there, said a company spokesman, “Early project starts offer a good starting point for growth in rental services, particularly in Sweden and Germany, where construction growth forecasts are favourable. In the modular space business, demand continued to be strong.”
EBITA was €4.4 million, down from €6.4 million in the same period last year. EBITA margin was 3.1% of sales, compared to 4.3% previously. The result was weakened by the modest demand in January and February, after which markets picked up in March, added the spokesman. Earnings per share stood at €-0.03, a improvement from -0.04 last year.
During the quarter Cramo reduced its costs in Sweden to enhance the efficiency of its operations, which are expected to take effect in the second quarter of 2014. The situation has already started improving in Norway, where costs were also reduced.
In Eastern Europe, sales and profit developed as expected, with the exception of the joint venture Fortrent. In Russia and Ukraine, the Ukrainian crisis resulted in reduced construction and the demand for rental services, said the company. Fortrent responded by rapidly adjusting it costs and decreasing its level of investment.
Cash flow from operating activities was €8.1 million, down from €17.9 million in the same quarter last year. A tax payment of €9.7 million in Finland contributed to this, a cost the company is now appealing.
Since the review period Cramo expanded its modular space business in Germany by acquiring C/S RaumCenter. In Finland, it acquired OptiRent. Both of the acquisitions were completed in April.
Vesa Koivula, president and CEO of Cramo Group, commented, “Our result for the first quarter of 2014 did not entirely meet our expectations, but I believe that Cramo Group will reach its full year performance goals.
Mr Koivula added, “My favourable full-year outlook for 2014 is based not only on market forecasts, but also on our determined operational development over the past few years. I am expecting the rental market to resume growth during the summer and our business operations to develop favourably from this point forwary."