Ramirent still growing but conditions worsen

Ramirent reported weakening market conditions in most of its 13 operating countries for the quarter to 30 September, with the worst affected areas being Denmark, Norway, the Baltic States and Hungary. The rental company has initiated a cost cutting programme but is not yet planning any depot closures.

Sales for the quarter increased by 12.9% to €187.2 million, although operating profits fell by 11% to €34.4 million. The sales increase represents a slowing in Ramirent's growth rate, with sales for the first nine months of the year up 16.7% at €530.1 million.

Ramirent's chief executive officer, Kari Kallio (who steps down as CEO at the end of this year to be replaced by the ex-Cramo executive Magnus Rosén), said; "The global financial crisis and the economic slowdown continued to weaken the rental market in most of our countries during the third quarter. Overall, the level of investments in new construction and industrial projects is decreasing rapidly while the level of renovation activities is more stable."

Mr Kallio said the group's businesses in Finland, Sweden, Russia, Ukraine, Poland and the Czech and Slovakian republics remains strong, but further weakened in Norway, Denmark, the Baltic States and Hungary.

"Due to the rapid deceleration of the market, our margins and profitability declined", said Mr Kallio, "We will reinforce the actions to adjust our business operations to the new market situation. We will intensify the process of re-allocating excess fleet capacity to markets facing more favourable conditions. We are also taking additional measures to streamline our cost structure to improve competitiveness and generate cash flow."

Some jobs are already being cut in "selected markets", said Ramirent, but with no depot closures made so far.

Ramirent's fastest growing area was Europe Central (Poland, Czech, Slovakia and Hungary), where sales grew by 76.3% to €27.4 million, followed by Finland (up almost 20% to €42.9 million) and Sweden (13.4% rise to €42.1 million). Sales in Norway were almost flat at €36.8 million, and down 6.8% to €14 million in Denmark. Sales in Europe East (Russia, Ukraine and the Baltic States) fell 3.3% to €25.6 million.

The outlook for the rest of the year is for construction output in Sweden and Finland to slow down, and to decrease in Denmark and Norway. Ramirent said it expected growth to continue in most of the east and central European markets, "except in the Baltics and Hungary where the construction markets have distinctly slowed down."

Ramirent said there was a risk of a wider slowdown because of the financial crisis and that it had developed "contingency plans...to address the risk of a further market decline and to be prepared to rapidly implement change where needed."