Vantaa, Finland, 2014-10-29 08:00 CET (GLOBE NEWSWIRE) -- Cramo Plc Interim Report 29 October 2014, at 9.00 am Finnish time (GMT+2)
Cramo’s Interim Report January–September 2014
Performance improvement actions proceeding
7–9/2014 highlights (year-on-year comparison in brackets):
- Sales EUR 171.1 (173.6) million; the change was -1.4%. In local currencies, sales grew by 1.9%
- EBITA EUR 30.5 (32.3) million, EBITA margin 17.8% (18.6%)
- Earnings per share EUR 0.45 (0.48)
- Cash flow from operating activities EUR 33.2 (50.9) million and cash flow after investments EUR -5.4 (26.4) million
- The Group strategy was updated in September, financial targets unchanged
- The new guidance announced in September: In 2014, Cramo Group’s sales and EBITA margin will be lower compared to 2013
1–9/2014 highlights:
- Sales EUR 471.2 (482.2) million; the change was -2.3%. Sales grew in local currencies, excluding restructuring in Russia, by 2.1%
- EBITA EUR 47.3 (55.2) million, EBITA margin 10.0% (11.4%)
- Earnings per share EUR 0.54 (0.63)
- Return on equity (rolling 12 months) 8.2% (8.0%)
- Cash flow after investments EUR -26.8 (15.9) million
- Gearing 85.6% (82.9%)
Guidance for 2014: In 2014, Cramo Group’s sales and EBITA margin will be lower compared to 2013.
| KEY FIGURES AND RATIOS (MEUR) | 7-9/14 | 7-9/13 | Change % | 1-9/14 | 1-9/13 | Change % | 1-12/13 |
| Income statement | |||||||
| Sales | 171.1 | 173.6 | -1.4 % | 471.2 | 482.2 | -2.3 % | 657.3 |
| EBITDA | 55.1 | 55.7 | -1.2 % | 119.5 | 125.6 | -4.9 % | 173.8 |
| EBITA 1) | 30.5 | 32.3 | -5.6 % | 47.3 | 55.2 | -14.3 % | 79.9 |
| % of sales | 17.8 % | 18.6 % | 10.0 % | 11.4 % | 12.2% | ||
| Operating profit (EBIT) | 27.8 | 29.8 | -6.6 % | 39.4 | 45.0 | -12.3 % | 66.8 |
| Profit before taxes (EBT) | 24.8 | 26.1 | -5.1 % | 29.6 | 33.9 | -12.7 % | 51.9 |
| Profit for the period | 19.7 | 20.4 | -3.3 % | 23.5 | 26.5 | -11.4 % | 42.8 |
| Share related information | |||||||
| Earnings per share (EPS), EUR | 0.45 | 0.48 | -6.2 % | 0.54 | 0.63 | -13.9 % | 1.01 |
| Earnings per share (EPS), diluted, EUR | 0.45 | 0.48 | -6.3 % | 0.53 | 0.62 | -14.3 % | 1.00 |
| Shareholders’ equity per share, EUR | 11.13 | 11.49 | -3.2 % | 11.56 | |||
| Other information | |||||||
| Return on investment, % 2) | 6.9 % | 6.8 % | 7.7 % | ||||
| Return on equity, % 2) | 8.2 % | 8.0 % | 8.3 % | ||||
| Equity ratio, % | 43.8 % | 44.3 % | 47.1 % | ||||
| Gearing, % | 85.6 % | 82.9 % | 72.9 % | ||||
| Net interest-bearing liabilities | 415.2 | 402.4 | 3.2 % | 364.8 | |||
| Gross capital expenditure (incl. acquisitions) | 45.1 | 31.1 | 45.1 % | 125.5 | 98.9 | 26.9 % | 129.6 |
| of which acquisitions/business combinations | -0.3 | -0.8 | 11.0 | 29.6 | -62.8 % | 29.1 | |
| Cash flow from operating activities | 33.2 | 50.9 | -34.9 % | 70.4 | 94.0 | -25.1 % | 160.3 |
| Cash flow after investments | -5.4 | 26.4 | -26.8 | 15.9 | 50.3 | ||
| Average number of personnel (FTE) | 2,534 | 2,465 | 2.8 % | 2,463 | |||
| Number of personnel at period end (FTE) | 2,546 | 2,479 | 2.7 % | 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
“In 2014, the European economies have recovered slower than anticipated, which has affected the demand for equipment rental services. Cramo Group´s euro-denominated sales for the first nine months were slightly lower than last year. However, sales grew in local currencies, excluding restructuring in Russia, by 2.1%.
In the third quarter, all business segments achieved a positive result. Still, Cramo Group’s profitability was slightly below last year. The upward turn in the Swedish market occurred later than we anticipated and the transition programme in Central Europe has not fully performed according to our expectations.
The key near-term initiative in Central Europe is a sales increase in new product areas and lowering our cost base. In Sweden, the result development has not yet met our high expectations, but results in the latter part of the third quarter indicate a favourable development during the remainder of the year. In Finland, our business operations continued to develop positively despite the weak market situation. In Norway, our performance improvement programme has proceeded as planned. In Eastern Europe, profitability improved with the exception of Fortrent.
We continue to develop our operations. In the second quarter, we announced several performance improvement actions, particularly in our Scandinavian and Central European markets. Reduction of fixed costs and other performance improvement actions have proceeded as planned and are enhanced in Central Europe. This gives us a good platform for our profit development going forward.
In September, we announced Cramo Group’s updated strategy. The new strategy is more focused, involves everyone at Cramo and will enable us to reach our financial targets. The core of our new strategy is “Cramo People living the Cramo Story”. Cramo Story is a wide programme aiming at increasing sales, differentiating ourselves from competition, providing specific customer value and strengthening our corporate culture in order to achieve our targets.
In addition to Cramo Story, the implementation of the strategy requires the adoption of the Cramo Performance Management Model in our key operations and the completion of the transition programme in Central Europe. Other key initiatives include the modular space growth strategy, dynamic pricing, acquisitions and outsourcing. In September, we also published additional financial information by product area related to our modular space growth plans.
Despite that Cramo Group´s profitability was slightly below last year in the third quarter, I am reasonably satisfied with our result even if the result improvement in Central Europe is delayed.” says Vesa Koivula, President and CEO of Cramo Group.
SUMMARY OF FINANCIAL PERFORMANCE IN JANUARY–SEPTEMBER 2014
Cramo Group’s consolidated sales for January–September decreased by 2.3% to EUR 471.2 (482.2) million. However, in local currencies, sales increased by 1.3%. Sales growth for January–September in local currencies, excluding restructuring in Russia, was 2.1%.
The sales for the third quarter decreased by 1.4% to EUR 171.1 (173.6) million. In local currencies, sales grew by 1.9%. Early in the third quarter, sales developed more weakly than Cramo expected but towards the end of the quarter, sales developed according to expectations.
EBITA for January–September was EUR 47.3 (55.2) million, or 10.0% (11.4%) of sales. In the third quarter, EBITA was EUR 30.5 (32.3) million, or 17.8% (18.6%) of sales.
In January–September, earnings per share were EUR 0.54 (0.63). In the third quarter, earnings per share were EUR 0.45 (0.48).
In the third quarter, a positive result was achieved in all business segments. Despite the weak market situation, the result was good and continued to improve in Finland. A good result was also achieved in Sweden, even though the market turn occurred later than Cramo anticipated, towards the end of the period. Cramo reduced its fixed costs in Sweden as planned. In Norway, operational efficiency was improved according to the plans and the results are expected to show towards the end of the year and fully in 2015. In Denmark, the market situation developed favourably and the result for the third quarter improved year-on-year.
In Central Europe, the third-quarter result did not meet expectations. Early in the year, costs related to the extensive transition programme weakened the result in Central Europe, whereas in the third quarter, the result was weakened especially by sales being lower than expected. The utilisation rates of new product groups are increasing steadily, but construction machinery utilisation rates in the third quarter were lower than in the previous year. During the period, the cost level was lowered and performance improvement actions were increased. Increasing fleet utilisation rates is still a key objective.
In Eastern Europe, profitability impoved in the third quarter with the exception of Fortrent, the joint venture operating in Russia and Ukraine. However, Fortrent succeeded in adjusting its cost base to the weakened market situation and also Fortrent’s result was almost at the previous year’s level. Fortrent’s cash flow was strong due to the low investment level.
In January–September, Cramo Group’s cash flow from operating activities was EUR 70.4 (94.0) 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. Gross capital expenditure was EUR 125.5 (98.9) million, and net cash flow from investing activities was EUR -97.2 (-78.1) million. Cash flow after investments was EUR -26.8 (15.9) million.
In the third quarter, cash flow from operating activities was EUR 33.2 (50.9) million. The operating cash flow decreased against last year because of a change in net working capital amounting to EUR 17 million, but net working capital is expected to be released periodically in the fourth quarter. Cash flow after investments was EUR -5.4 (26.4) million. The Group’s gearing was 85.6% (82.9%) at the end of September.
MARKET OUTLOOK
Eurozone economies are still expected to resume growth in 2014, but growth will be modest. The prolonged Ukrainian crisis and the spreading of its impacts from Russia to Europe has increased uncertainty about economic development.
Growth in the eurozone is expected to strengthen in 2015–2016 but more slowly than what was estimated before. Growth has been slowed down by the strong euro; however, during the third quarter, the euro’s external value started to weaken. In countries outside the eurozone, such as Sweden, the economy is expected to grow more quickly.
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, except Finland, 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, address: Aleksanterinkatu 44 A (2nd floor) in Helsinki on Wednesday, 29 October 2014 at 11:00 a.m. 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 29 October 2014 in the afternoon.
PUBLICATION OF FINANCIAL INFORMATION 2015
Cramo Plc’s Financial Statements Bulletin for 2014 will be published on Tuesday, 10 February 2015.
The Annual Report containing the full financial statements for 2014 will be published in electronic format in week 10/2015.
Cramo Plc’s 2015 Annual General Meeting will take place on Tuesday, 31 March 2015, in Helsinki.
In 2015, Cramo Plc will publish three interim reports:
The interim report for January–March 2015 will be published on Tuesday, 5 May 2015.
The interim report for January–June 2015 will be published on Wednesday, 5 August 2015.
The interim report for January–September 2015 will be published on Thursday, 29 October 2015.
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.
