Ramirent says wait for 2011 for return to growth

By Murray Pollok16 June 2009

Ramirent CEO Magnus Rosén.

Ramirent CEO Magnus Rosén.

It could be 2011 before Ramirent is able to enter a new growth phase following the current downturn, said the company's chief executive officer, Magnus Rosén.

Speaking at Ramirent's recent Capital Markets Day, Mr Rosén told analysts that the company's priorities were to safeguard profitability and cash flow and reduce net debt, making the company financially strong enough to capitalise on consolidation opportunities when they arise.

"There is still some time to go before it's time to consolidate the market. How long? I don't think it's this year - things will become a little bit worse before they get better. But definitely there will be possibilities - maybe next year, maybe 2011."

In the meantime, Mr Rosén said Ramirent will continue to age its fleet and reduce capital expenditure. The company spent around €200 million in 2008 and will invest just €10 million ("pocket money") this year. He said Ramirent's fleet was still young - two thirds of all equipment was bought in the last three or four years - and that it was "absolutely" possible to have low levels of spending in 2009, 2010 and 2011. He said, however, it was likely that some increased investment would be necessary in 2011.

Mr Rosen said the current strategy was to maintain its focus on its existing markets and that the priority would be on organic growth in its existing markets before venturing into new countries.

Another aim is to expand the company's customer base, with industrial sectors a particular target. Mr Rosén said construction currently represents around 80% of its revenues; "I would really like that to come down to 60%. We'll see if that's possible in the coming years...the long term strategy is to have a diversified customer base and with less reliance on the construction sector."

Ramirent is setting industrial business targets for its sales staff as one way of increase its penetration in industrial markets.

Mr Rosén said Ramirent was committed to remaining in the Baltic States, which are currently extremely badly hit by the recession. He said it would take a long time before levels of demand returned to those seen in 2006 and 2007.

He also said that Ramirent's broad depot network and its pan-European fleet was helping it move machines to where the demand was the highest. For example, he said Poland was still seeing a reasonable activity level and that there had been an influx of equipment from other European rental companies, including several from Spain. "[But] it is easier for us because we have a very good network", said Mr Rosén.

The company also aims to expand the product offering in some of its newer market areas. Mr Rosén said Ramirent's businesses in the Nordic countries, as well as Poland and Russia, already operated as one-stop-shops with a wide product offering. He said Ramirent's other businesses will expand their ranges; "That's going to happen", he said.

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