'Difficult' first quarter for Cramo as sales fall 7.2%

Cramo experienced a “difficult” first quarter with sales impacted by weak construction demand and harsh weather that delayed the start of projects in many of its areas.

In response the company has started to reduce costs and it said these measures had already made a contribution. EBITA profits fell by around 40% to €6.4 million for the period and operating profits were down 77.8% to €1.7 million, compared to the same quarter in 2012.

Revenues fell by 7.2% to €148.5 million, with a fall of 5.3% after accounting for the disposal of certain modular space businesses in early 2012 and also the exclusion of revenues from Russia and Ukraine following the creation of the Fortrent joint venture company.

Vesa Koivula, Cramo CEO, said; “As we expected, the first quarter was financially difficult for Cramo. We may be experiencing the low point of the business cycle in our main markets, and during the quarter there were also non-recurring expenses resulting from corporate reorganisations.

“Our result was affected by the long winter season which postponed the start of numerous construction projects. The demand for equipment rental is expected to pick up in the spring.”

However, Mr Koivula said Cramo did not expect growth in construction or equipment rental in 2013, with a few exceptions; “This emphasises the significance of improving operational efficiency….The effect of cost savings and other efficiency measures are already materialising. This forms a solid foundation for better profitability in the challenging operating environment of 2013”.

Sales were down in all territories except for Norway, where continued good construction demand saw revenues increase by 10.7%. Sales in Sweden fell 5.9% - mainly because of lower demand in Southern Sweden – and in Finland sales reduced by 21.6% because of a combination of weak demand and the modular space sale last year.

Denmark saw a 7.0% cut in sales, although that was achieved after a restructuring of its depot network, with just seven depots now compared to 18 at the start of 2012.

Weather delays also impacted Germany, which is the major market in Cramo’s Central Europe area, where sales were down 4.6% to €11.2 million. Sales in Eastern Europe fell by 10%, although that reflected the exclusion of sales in Russia, which are now part of the Fortrent joint venture with Ramirent.