Spain's HUNE targets new markets as restructuring continues
By Murray Pollok04 October 2010
Spanish rental company HUNE is to embark on an international strategy that will see it establish rental business in neighbouring countries like Portugal and France as well as in developing markets in South America.
The company, which since May has been owned by Madrid-based restructuring specialist Noraction, has already stared renting in Portugal and is now seeking sites for depots in the country.
Alejandro Rodríguez-Carmona, the director general of Noraction who is running HUNE, told IRN; "We are now evaluating different possibilities. In some cases on our own, and in some cases with partnerships [with other rental companies as an investor]."
Mr Carmona could not give a timetable for when it would be renting in France or South America but said; "We want to go to markets where our current Spanish clients are working."
Alongside the internationalization strategy - which mirrors that of its main competitor, GAM - Noraction is restructuring HUNE's Spanish operation. The separate general equipment and aerial platform businesses have been merged and the depot network in Spain is being reduced from 70 locations to 50. In most cases the reduction has been made by merging two depots operating in a single city.
"The clients for the two businesses are pretty similar, but not often shared between the two divisions", said Mr Carmona, "In the current climate it doesn't make sense to have two people visiting clients." He said the merger would allow the company to realise cost cutting and revenue synergies. As a result, the headcount at the company will fall from 900 to around 800 by the end of the year.
Mr Carmona said the restructuring and internationalization were necessary because of the 50% fall in HUNE's revenues since the peak in 2007. He said the Spanish market remained difficult, with private investment in construction still at a low level and government plans for public works "not looking good."
However, he said that there were signs that the supply of equipment in Spain was now more aligned with the levels of demand and he agreed with GAM's public statements that prices were stabilizing and in some areas improving.
He said he was optimistic about the long term prospects for the business; "If we weren't [optimistic] we wouldn't have made the investment. It's a difficult market, but the economics of the business remain in place."
When Noraction acquired HUNE it renegotiated its debts down from €514 million to €292 million.