Cramo hit by slower European recovery
By Helen Wright29 October 2014
Finnish rental company Cramo has reported lower revenues and earnings for the nine months to the end of September, thanks to slower recovery in European economies.
The company said revenues for January to September dropped 2.3% year-on-year to €471 million, while nine-month earnings before interest tax and amortisation dropped to €47.3 million from €55.2 million a year ago.
CEO Vesa Koivula said, “In 2014, the European economies have recovered slower than anticipated, which has affected the demand for equipment rental services.
"Cramo Group´s Euro-denominated sales for the first nine months were slightly lower than last year. However, sales grew in local currencies, excluding restructuring in Russia, by 2.1%.
“In the third quarter, all business segments achieved a positive result. Still, Cramo Group’s profitability was slightly below last year. The upward turn in the Swedish market occurred later than we anticipated and the transition programme in Central Europe has not fully performed according to our expectations.”
Mr Koivula added, “The key near-term initiative in central Europe is a sales increase in new product areas and lowering our cost base. In Sweden, the result development has not yet met our high expectations, but results in the latter part of the third quarter indicate a favourable development during the remainder of the year.
“In Finland, our business operations continued to develop positively despite the weak market situation. In Norway, our performance improvement programme has proceeded as planned. In Eastern Europe, profitability improved with the exception of Fortrent.”
Earlier this year, Cramo updated its strategy to include targeting the central European market as one of three ‘must-win’ battles.
However, the company said this region did not perform to its expectations in the third quarter. It said costs related to its new transition programme in the region earlier in the year had weakened the result, while sales were also lower than expected in the three months to the end of September,
“Utilisation rates of new product groups are increasing steadily, but construction machinery utilisation rates in the third quarter were lower than in the previous year. During the period, the cost level was lowered and performance improvement actions were increased. Increasing fleet utilisation rates is still a key objective,” the company said.
Looking ahead, Cramo said modest growth was expected for Eurozone economies in 2014, with this expected to strengthen in 2015 to 2016, albeit more slowly than previously estimated.