Vantaa, Finland, 2014-08-06 08:00 CEST (GLOBE NEWSWIRE) -- Cramo Plc Interim Report 6 August 2014, at 9.00 am Finnish time (GMT+2)
Cramo’s Interim Report January–June 2014
Challenging first half, performance improvement actions in place
4–6/2014 highlights (year-on-year comparison in brackets):
- Sales EUR 159.8 (160.1) million; the change was -0.2%. Sales change in local currencies was 3.5%
- EBITA EUR 12.5 (16.5) million, EBITA margin 7.8% (10.3%)
- Earnings per share EUR 0.12 (0.19)
- Cash flow from operating activities EUR 29.2 (25.2) million and cash flow after investments -10.6 (8.4) million
- Expansion in the modular space market in Germany through the C/S RaumCenter acquisition and a significant customer contract
- Construction machinery rental was strengthened in Finland with the OptiRent acquisition
- Refinancing of EUR 375 million long-term loan facilities
1–6/2014 highlights
- Sales EUR 300.0 (308.6) million; the change was -2.8%. Sales change in local currencies, excluding restructuring in Russia, was 2.2%
- EBITA EUR 16.8 (22.9) million, EBITA margin 5.6% (7.4%)
- Earnings per share EUR 0.09 (0.15)
- Return on equity (rolling 12 months) 8.7% (8.0%)
- Cash flow after investments EUR -21.4 (-10.5) million
- Gearing 89.0% (92.4%)
Guidance for 2014 unchanged: In 2014, Cramo Group’s EBITA margin will continue to improve compared to 2013. Cramo Group’s sales is also expected to grow in 2014, however, exact sales is exposed to changing exchange rates.
| KEY FIGURES AND RATIOS (MEUR) | 4-6/14 | 4-6/13 | Change % | 1-6/14 | 1-6/13 | Change % | 1-12/13 |
| Income statement | |||||||
| Sales | 159.8 | 160.1 | -0.2 % | 300.0 | 308.6 | -2.8 % | 657.3 |
| EBITDA | 36.6 | 40.1 | -8.9 % | 64.4 | 69.9 | -7.8 % | 173.8 |
| EBITA 1) | 12.5 | 16.5 | -24.6 % | 16.8 | 22.9 | -26.5 % | 79.9 |
| % of sales | 7.8% | 10.3% | 5.6% | 7.4% | 12.2% | ||
| Operating profit (EBIT) | 9.8 | 13.5 | -27.4 % | 11.6 | 15.2 | -23.6 % | 66.8 |
| Profit before taxes (EBT) | 6.4 | 10.1 | -36.3 % | 4.8 | 7.8 | -38.3 % | 51.9 |
| Profit for the period | 5.0 | 7.9 | -36.3 % | 3.8 | 6.1 | -38.3 % | 42.8 |
| Share related information | |||||||
| Earnings per share (EPS), EUR | 0.12 | 0.19 | -38.9 % | 0.09 | 0.15 | -40.0 % | 1.01 |
| Earnings per share (EPS), diluted, EUR | 0.11 | 0.19 | -39.9 % | 0.09 | 0.14 | -40.6 % | 1.00 |
| Shareholders’ equity per share, EUR | 10.68 | 10.97 | -2.6 % | 11.56 | |||
| Other information | |||||||
| Return on investment, % 2) | 7.2 % | 6.8 % | 7.7 % | ||||
| Return on equity, % 2) | 8.7 % | 8.0 % | 8.3 % | ||||
| Equity ratio, % | 42.7 % | 42.2 % | 47.1 % | ||||
| Gearing, % | 89.0 % | 92.4 % | 72.9 % | ||||
| Net interest-bearing liabilities | 414.5 | 428.4 | -3.3 % | 364.8 | |||
| Gross capital expenditure (incl. acquisitions) | 53.1 | 21.6 | 145.1 % | 80.4 | 67.7 | 18.7 % | 129.6 |
| of which acquisitions/business combinations | 11.3 | -0.8 | 11.3 | 30.4 | -62.8 % | 29.1 | |
| Cash flow from operating activities | 29.2 | 25.2 | 15.9 % | 37.3 | 43.1 | -13.5 % | 160.3 |
| Cash flow after investments | -10.6 | 8.4 | -21.4 | -10.5 | -103.5 % | 50.3 | |
| Average number of personnel (FTE) | 2,516 | 2,457 | 2.4 % | 2,463 | |||
| Number of personnel at period end (FTE) | 2,567 | 2,428 | 5.7 % | 2,416 | |||
| 1) EBITA is operating profit before amortisation and impairment resulting from acquisitions and disposals | |||||||
| 2) Rolling 12 month | |||||||
CEO VESA KOIVULA’S COMMENT
“After a challenging start to the year, the rental market started to pick up gradually during the second quarter. The recovery was slower than we expected, but nevertheless, signs of growth could be seen in different markets. I am particularly satisfied about our performance in Finland but also with the development of demand in the Swedish and Danish markets in the second quarter.
Our result for the second quarter of 2014 did not meet our expectations, but I believe that Cramo Group will reach its full-year performance goals. We have performance improvement actions in place in several countries and I also expect demand for rental services to improve during the rest of the year.
In order to ensure favourable profit development, we decided to adjust our costs in Norway through personnel reductions and optimisation of our depot network. It is important for us to create structures that make the achievement of our financial targets possible in each individual market in the future.
In Central Europe, our result was weakened by the transition programme, but the result will improve during the second half of the year.
My favourable full-year outlook for 2014 is based not only on market forecasts, but also on our determined operational development over the past few years. We will continue to strengthen our customer focus in all of our countries of operation. We have also developed our pricing models and solutions, so that we will be able to make use of opportunities as soon as the rental market resumes growth.
Although the second half of the year is associated with uncertainties, I expect Cramo Group’s sales to grow and our profitability to improve during the rest of the year,” says Vesa Koivula, President and CEO of Cramo Group.
SUMMARY OF FINANCIAL PERFORMANCE IN JANUARY–JUNE 2014
Cramo Group’s consolidated sales for January–June decreased by 2.8% to EUR 300.0 (308.6) million. In local currencies, sales increased by 0.9%. Sales change for January–June in local currencies, excluding restructuring in Russia, was 2.2%.
The challenging market situation of early 2014 started to improve during the second quarter, as Cramo expected, but at a slower pace than anticipated. The market situation improved especially in Sweden, Denmark and Poland. In Finland, Cramo has succeeded in its business operations and profitability continued to improve. In Germany, Cramo’s transition programme weakened the result. In the modular space business, demand continued to be strong. The sales for the second quarter decreased by 0.2% to EUR 159.8 (160.1) million. In local currencies, sales grew by 3.5%.
EBITA for January–June was EUR 16.8 (22.9) million, or 5.6% (7.4%) of sales. In the second quarter, EBITA was EUR 12.5 (16.5) million, or 7.8% (10.3%) of sales. Despite the challenging first half of the year, Cramo’s expectations of profit development during the second half of the year are positive.
In January–June, earnings per share were EUR 0.09 (0.15). In the second quarter, earnings per share were EUR 0.12 (0.19).
Despite the market situation, the result was good in Finland. A good result was also achieved in Sweden where the market situation picked up. In early 2014, Cramo reduced its cost base in Sweden. The savings are expected to have a visible effect on the result during the second half of the year. In Norway, provisions were taken to reduce personnel and to trim the depot network. In Denmark, the market situation improved but the result did not meet expectations. The result in Denmark and Central Europe is expected to improve during the second half of the year.
In Eastern Europe, sales and profit developed positively, and Fortrent, the joint venture operating in Russia and Ukraine, also succeeded in adjusting its operations to the prevailing market situation. Fortrent has adjusted its costs and reduced its investment level.
In January–June, cash flow from operating activities was EUR 37.3 (43.1) million. Payments in accordance with a residual tax decision of EUR 9.7 million in the first quarter in Finland had a negative effect on cash flow from operating activities. The company considers the decision unfounded and has appealed. Gross capital expenditure was EUR 80.4 (67.7) million, and net cash flow from investing activities was EUR -58.6 (-53.6) million. Cash flow after investments was EUR -21.4 (-10.5) million.
In the second quarter, cash flow from operating activities was EUR 29.2 (25.2) million and cash flow after investments was EUR -10.6 (8.4) million. Cash flow from investing activities was increased by the acquisitions made in the second quarter, in addition to which a significant part of the 2014 fleet investments took place in the second quarter. The Group’s gearing was 89.0% (92.4%) at the end of June.
Cramo refinanced its long-term loan facility in June, and its size was increased from EUR 325 million to EUR 375 million. The loan facility will mature in 2020 and includes a one-year extension option. In combination with Cramo’s strong financial position, the loan facility offers an opportunity to implement the company’s growth strategy in the coming years.
In April, Cramo expanded its modular space business in Germany by acquiring C/S RaumCenter and by signing a significant customer contract with Technische Werke Ludwigshafen. In Finland, Cramo strengthened its position in the construction machinery rental market by acquiring OptiRent.
MARKET OUTLOOK
Eurozone economies are expected to resume growth in 2014. However, in early 2014 economic recovery was slower than expected. The Ukrainian crisis has also brought uncertainty to growth expectations. However, its effects have so far been limited to Russia and Ukraine.
Growth is expected in the second half of the year. The expectations with regard to the strengthening growth in 2015–2016 remain unchanged.
In Europe, market-specific differences in the development of construction and the demand for rental services are considerable. However, in its June forecast Euroconstruct estimated that construction activity will pick up in all of Cramo’s operating countries in the next few years.
In the long term, the equipment rental market is expected to grow faster than construction. Changes in demand usually follow those in construction with a delay.. In addition to construction, the demand for equipment rental services is affected by industrial investments and the rental penetration rate.
The European Rental Association (ERA) is expecting equipment rental to increase in all of Cramo’s main markets in 2014.
(All construction market forecasts presented in this review are estimates by Euroconstruct, unless otherwise stated.)
BRIEFING
Cramo will hold a briefing and a live webcast at Kämp Kansallissali at Aleksanterinkatu 44 A (2nd floor) in Helsinki on Wednesday, 6 August 2014 at 11:00 am. The briefing will be in English.
It can be viewed live on the Internet at www.cramo.com. A replay of the webcast will be available at www.cramo.com from 6 August 2014 in the afternoon.
PUBLICATION OF FINANCIAL INFORMATION 2014
In 2014, Cramo Plc will publish one more interim report.
Its interim report for January–September 2014 will be published on 29 October 2014.
CRAMO PLC
Vesa Koivula
President and CEO
Further information:
Vesa Koivula, President and CEO, tel: +358 40 510 5710
Martti Ala-Härkönen, CFO, tel: +358 10 661 10, +358 40 737 6633
Distribution:
NASDAQ OMX Helsinki Ltd.
Main media
www.cramo.com
Cramo is Europe’s second largest rental services company specialising in construction machinery and equipment rental and rental-related services as well as the rental of modular space. Cramo operates in fifteen countries with 360 depots. With a group staff around 2.500, Cramo's consolidated sales in 2013 was EUR 660 million. Cramo shares are listed on the NASDAQ OMX Helsinki Ltd.
