GAM sales still falling but international growth continues

By Murray Pollok12 August 2010

Spanish rental company GAM's revenues for the first half of 2010 were 13.75% down year on year at €123.3 million, although the continued falls in its domestic sales were offset by a 60% increase in its international activities, which now represent 16% of total sales (excluding Portugal). Net losses for the period were €18.1 million.

GAM said its internationalisation strategy was succeeding, with sales from its international businesses (excluding Portugal) of €8.3 million in the first quarter and €11.1 million in the second. Again excluding Portugal, GAM's international sales grew by 253% in the first half year, with Brazil and Mexico showing the strongest growth.

The company aims to continue to establish new operations outside Spain, with Morocco a recent new start and plans to open branches in Chile ("in the coming months") and Columbia ("before the end of the year"). It now has 400 employees and 30 branches outside Spain.

A new €30 million line of credit was arranged in late July and this will cover GAM's capital expenditure needs for the two years, and largely dedicated to accelerating the growth of its operations in Mexico, Brazil and Panama where it said the potential was greatest.

Inside Spain, GAM said that non-construction related activities grew by 34%, although this excludes turnover at the wind power division where revenues in the half year collapsed by 77%. The best performing ‘diversified sectors' - which accounted for around €30 million in revenues in the first half of the year - were groundcare/landscaping equipment (up 62%), road maintenance (up 56%), industrial (up 32%) and ports (up28%).

Even so, construction activity in Spain still represents 50% of total turnover. GAM does not give details of the drop in sales in Spain alone. However, given the increase in international and ‘diversified' activity, domestic construction-related sales must have fallen in the range of 20 to 30% in the first half of the year.

The company said it has managed to increase rental prices by 6% at the end of June compared to a year ago with a special campaign launched earlier this year. GAM said the campaign was ongoing and it expects there to be further price increases.

GAM's cost cutting initiatives have now saved the company €31 million on an annualised basis, and the company has set a target of €40 million annual cost savings.

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