Strong final quarter for Ramirent but profits "unsatisfactory"

By Murray Pollok16 February 2011

Ramirent's revenues for the final quarter of the year were up 19.0% to €150.1 million, with sales for the full year up 5.7% to €531.3 million. Operating profits were almost €30 million for the year and €11.3 million for the final quarter.

Although the fourth quarter saw increased construction activity and improving rental rates, Ramirent said profitability remained unsatisfactory.

"Rental rates are improving, but pricing continues to weigh on gross margin", said Magnus Rosen, Ramirent's chief executive officer. "In addition, costs are increasing, as the company is preparing to meet increased market demand."

Mr Rosen said the rental sector was experiencing positive growth in most of its territories; "We anticipate higher activity levels in infrastructure, residential construction and renovation construction in most of our countries. Increased construction activity, coupled with improving price levels, is expected to contribute to an improved result before taxes in 2011 for Ramirent."

The company made gross capital expenditures of €62 million in 2010 - more than three times the amount in 2009 - and said that healthier market demand would result in increased capital expenditure this year on certain products and customer segments.

All the company's territories grew their revenues in the final quarter of the year, with Sweden the best performer with a 38.5% increase in sales to €44.9 million. Next best were Eastern Europe (up 19.7%), Finland and Europe Central (both up 15.3%), followed by Norway (up 8.7%) and Denmark (up 0.4%).

All territories posted revenue increases for the full year, except for Denmark (down 17.0%) and Eastern Europe (down 16.8%).

Mr Rosen said the focus in 2011 would be growth primarily in its existing market areas "which offer additional potential...We continue to monitor and assess acquisition cases in the market and continue to see interest from customers to discuss fleet outsourcing arrangements."

Meanwhile, the company has announced an incentive scheme for 60 of its top managers - including the senior management group - covering the period 2011 to 2013. Under the scheme, the maximum individual reward that can be made is a sum equivalent to 287000 Ramirent shares, which equates to €3.2 million at the current €11.2 share price.

Ramirent also announced its latest major rental contract win; a two year agreement with VR Track, Finland's largest rail contractor. VR Track will "concentrate" its rental purchases with Ramirent in the two year period, said Kyösti Sandell, Ramirent Finland's sales manager for southern Finland.

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