Ramirent makes further cuts after poor start to the year

By Murray Pollok12 March 2009

Ramirent is taking further cost cutting measures and is proposing that no dividend be paid for 2008 following a very difficult first two months of 2009, with sales in eastern Europe collapsing by 60% and group sales down 26% compared to 2008.

The company will reduce its workforce by a further 150 people, taking the total reduction to 750 people, representing 20% of its 2008 staff.

Ramirent said the demand for rental services had declined in all its markets, but in particular the Baltic States, Russia and Ukraine, caused by "worsened fundamentals in combination with a global risk aversion to the Eastern emerging markets". The company said there had also been a "marked contraction" in the Nordic markets.

Ramirent's chief executive officer, Magnus Rosén, said; "2009 will be a challenging year and we are now launching additional actions...Investments in new capacity have already been halted and we will continue to right-size our fleet to optimize utilization, defend price levels and strengthen our cash flow in order to amortize debt".

Ramirent announced in December a plan to reduce costs by €50 million and said the plan was on schedule; "However, due to the weak development in the first two months and a worsened outlook for 2009, the Group will reinforce its actions to adjust the cost structure."

The company previously announced it would pay a dividend of €0.15 per share, but will now propose at the Annual General Meeting that no dividend be paid for 2008. Ramirent said the decision already had the support of owners representing 40% of the votes and share capital in Ramirent.

Ramirent's chairman, Peter Hofvenstam, said; "We understand the disappointment of our shareholders, but in this extraordinary market situation everyone needs to contribute. The Group is taking forceful actions to adapt to the rapid market decline, and 2009 will be difficult for the rental industry.

"However, the equipment rental business is structurally attractive in the long-term, and we are prepared to weather this downturn and continue our strategy of profitable growth."

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