Last year, Kiloutou revealed that its revenues grew by 1% to €462 million, but this modest growth came amid a string of acquisitions during the 12 month period – hinting that the group’s core revenues actually fell compared to 2014.
Indeed, Kiloutou Group CEO Xavier du Boÿs told IRN, “Like-for-like revenues were actually down year-on-year, by around 2.5% last year – which is not too much considering conditions in the French rental market.
“France has been very tough, especially in the construction market, and we have seen that civil works are really down thanks to financial problem among local authorities – the government has really cut investment here. We think this will be the same next year too.
“When it comes to the residential market, France is seriously lacking housing in large towns and cities, and I think this market will improve in 2016, but last year was very difficult. The recovery will come, because the needs are huge – we need apartments, we need houses, we need to renovate all the old houses and apartments, we need to improve living conditions and energy efficiency.”
There was some positivity towards the end of the year in this respect, Mr du Boÿs said. “We saw renovation pick up towards the end of 2015, which is a sign that people are starting to move house more. So this trickled through to an increase in rentals from small clients, but our larger clients who depend on bigger works are still struggling.”
However, the squeezed market conditions have taken their toll on France’s rental industry. Mr du Boÿs explained, “2015 saw rental companies slightly increase the number of machines in their inventories, which means we now have an imbalance between supply and demand – this has had a terrible impact on pricing. We have seen big decreases on prices in France, nevertheless, 2015 saw Kiloutou slightly improve its market share.”
Kiloutou has announced a series of initiatives to help it grow in the coming years, including a new corporate identity highlighting its focus on professional customers – which represent 94% of revenues.
“We have the widest range of customers on the market, we rent to any kind of client from the smallest to the biggest, including the individual,“ Mr du Boÿs said. “But we have changed our branding for several reasons.
“If you look back 15 years ago, 20% of our business consisted of individuals and the rest professionals, and now that has shifted to 6% individuals. Most of our strategy, and all of our efforts, have been targeted towards professionals, from the smallest company to the largest contractors and public authorities, including non-construction clients such as services, cleaning, utilities, etc. In fact, non-construction clients represent 36% of our business.”
Kiloutou conducted several market studies to find out what professional customers thought about its old logo, and was surprised to find out that many were not aware of the extra services that the company offered, such as operator training for access equipment. The shift to professionals was not perceived by our clients.
“They also said they felt the logo was old-fashioned, and not professional – too soft. We know our name means a lot, so we kept the name Kiloutou, but wanted to change our logo to something more powerful, reflecting our proximity to the client: we are professionals, with a true human dimension.”
Mr du Boÿs explained that the brand name Kiloutou is a play on words in French – phonetically, it means ‘who rents everything’, reflecting the French ‘Qui loue tout’, and has become a well-known brand in France with a high level of awareness.
“The reaction to the new logo has been very positive,” Mr du Boÿs said. “We just have the small task now of putting this branding on to our fleet of 25000 larger machines and changing the signage of over 400 branch outlets in our network!”
Indeed, this will certainly be a busy year for the company, with other growth initiatives including a significant fleet renewal plan. This will see the company invest in 4000 new large machines, largely comprising aerial platforms, excavators, telehandlers, wheeled loaders and compaction equipment.
Kiloutou has traditionally been famous for its smaller tools and equipment, and Mr du Boÿs was keen to stress that the latest round of capital expenditure did not represent a departure from this.
“The fleet renewal plans are definitely not a step away from the smaller machines,” he said. “We are proud of the quality of our machines but we still want to improve, so most of the investment will be a renewal investment. There will be no real increase in the size of our fleet, just renewal of 4000 larger machines and in tools.
“We still want to keep the stress on the small machines and the tools – a large part of the business is centred on tools, and we want to remain the market leader. So we will also be investing in smaller tools too.”
Mr du Boÿs said he expected the access market to perform better than the earthmoving market in 2016, so the 4000-unit machine replacement did represent a good opportunity to better allocate machines to markets.
“There will be greater investment in access than earthmoving, both electric and diesel machines. We are also seeing real success with access training.”
And Mr du Boÿs also highlighted the company’s recycling strategy for its used fleet. “We have been recycling our machines for spare parts and re-sale for a long time in many regions,” he said.
“Last year we made one more step forward: we established a new location in the north of France dedicated to the sale of second-hand machines. All the machines that we want to sell are sent to this centre and given full diagnostics by our staff, and then sold on outside Europe or to Eastern Europe.
“This new 32000m² site is a fantastic tool to optimise this re-sale activity. In the first year, about 2200 machines were sold through this centre and it will be much more in the future. We will also sell tools such as plates, rammers, etc.
“The main originality is to use our expertise and transparency to create confidence and get better offers from our clients. For each machine, we create a comprehensive folder including an accurate assessment of the condition of the machine and as many pictures as necessary. The potential buyer doesn’t have to see the machine to give a right quote. This process is very efficient. No surprise for anyone!”
Last year also saw Kiloutou grow its specialist divisions – a trend that the acquisitive company sees continuing in 2016, according to Mr du Boÿs. The company entered the modular building rental market with a deal to acquire Akmo, located in Villeneuve-le-Roi, close to Paris.
Akmo has a rental fleet of over 2500 modular building items from modular office units to prefabricated buildings, sanitary units and storage containers. Clients include craftsmen, SMEs and large national accounts.
“We are very happy with the Akmo acquisition – it is a very good company with huge knowledge of this speciality. We have a business plan to invest in this modular space renting," Mr du Boÿs said.
“We have also developed a separate subsidiary working in parties and events - mainly big events. This is also going very well. And in the future, we plan to enter other specialties.”
Meanwhile, Kiloutou has also been busy expanding its geographic boundaries – the company now has outlets in Poland and Spain, and – most recently –Germany (see box story). As far as Spain is concerned, Mr du Boÿs said the market was still challenging, but this opportunity was a waiting game.
“The recovery will be slow – not this year – but it will happen, and the Spanish market is definitely one that we feel we can succeed in; the rental culture is different but not too different from France. In the future, Kiloutou must be a significant player in Spain. The strategy is to start early, learn the market and grow in order to be ready for the recovery when it comes.
“We also took into consideration what we did in Poland, where we first expanded with two branches and then made two significant acquisitions. It’s going well here, its huge work to integrate these companies, and to invest sustainably in this market - getting logistic operations in place as well for instance. But we are succeeding very well here and are very happy, and for that reason we thought we’d try a second foreign country, then perhaps a third and a fourth.
“There are two new potential countries we are studying deeply today and I hope we will be in a position to open this year.”
And Mr du Boÿs said growth by acquisition was still definitely part of Kiloutou’s expansion strategy in France and beyond. Indeed, at the end of December, 2015, it acquired Aquiloc – a rental equipment company in south-west France with a network of 23 branches.
“There will be other acquisitions in France and in other countries; we are in discussions now. But organic investment is also part of our plan. There will be some organic openings in France, for instance, while a greenfield site could be on the cards for Poland and/or a new country. We are weighing up our options.”
Mr du Boÿs said the biggest challenge facing the rental market in Europe was transforming the industry from renting to a full service industry – a process that started several years ago and is ongoing. He said Kiloutou works hard to make sure that it conducts its business in a sustainable way.
“Customers don’t just want a machine, they want a real partner," Mr du Boÿs stressed.
"If they succeed, then we succeed, so this is the big challenge. We also need to invest in the digital world, in telematics – this is the new way of renting. And we put a lot of effort into it already.
“We have created an online market place for renting at Kiloutou.fr, where customers can ask for machines that are not in our fleet but in partners’ fleets.
"We also have a community website Wikimat.fr, which is a kind of ‘Wikipedia’ of machines, as well as a new app for smartphones, and a new website too which is responsive to smartphone and computer. Finally, we have an extranet for clients too.
“It’s is a new way of working and I’m really convinced that the digital economy will dominate our industry: we want to be among
This is an interview from the April/May 2016 issue of IRN. To read the full article, with extra images and information, subscribe to the magazine: http://www.khl.com/subscriptions/magazines/international-rental-news/