Cramo makes further cuts as market weakens

06 August 2009

Cramo painted a bleak picture in its latest financial results warning that hundreds of further job cuts will be made as market conditions continue to weaken towards the end of the year.

The company said cost reduction plans would see 30% of its workforce cut from the peak of around 2800 in August 2008, which would mean around 400 further redundancies over the rest of the year to just below 2000 employees.

Cramo said; "Due to the cyclicality of the construction industry and low investment levels in industry, Cramo Group's economic operating environment is expected to continue weakening towards year end. The Group expects construction to decrease in almost all of Cramo's market areas."

The company reported revenues down 29% to €109.3 million for the three months to 30 June, although the fall is 22.2% measured in local currencies. Losses after tax were €4.6 million (compared to profits of €15 million for the same quarter in 2008). EBITA for the second quarter was €4.8 million.

"The continued recession in construction and low industrial investments had a negative effect on sales and profitability", said Cramo, "The biggest sales decrease occurred in Central and Eastern Europe. In Finland, Sweden and Denmark sales continued to decrease.

"In Norway, sales grew measured in local currencies during the first half of the year. EBITA was positive in Sweden, Finland and Norway. In Sweden, profitability has stayed on a good level. In Denmark and in Central and Eastern Europe, profitability is unsatisfactory, but ongoing reorganisation measures are expected to improve profitability later in the year."

Cramo said that its cost cutting measures aimed to make savings this year of €35 million, although this would rise to €50 million on a yearly basis from 2010 onwards.

The company spent just €19 million on new fleet in the first six months of the year, and will invest around €30 for the full year, although that will be mainly on portable accommodation.

Cramo said utilisation rates had decreased in almost all market areas; "Price competition has tightened and is particularly strong in Denmark as well as in Central and Eastern Europe."

Sales in Central and Eastern Europe were €20.8 in the first half of the year, down 31.8% in local currencies. "The effects of the economic recession resulting from the financial crisis have been larger than expected in Central and Eastern Europe", said Cramo, "Demand decreased particularly heavily in the Baltic countries during the first half of the year. Also in Poland, the Czech Republic, Slovakia and Russia the recession has depressed demand more heavily than expected."

Cramo continues to restructure operations in these countries. In Latvia and Lithuania, for example, the depot network will be cut from 27 to 10-20 depots by the end of the year, while the Estonian network will be reduced by three to 15.

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