Cramo Plc
Financial Statement Bulletin Jan-Dec 2018
8 Feb 2019 at 9.00 am EET


QUARTER OF ACQUISITIVE GROWTH - NMG PART OF CRAMO FROM 31ST OF OCTOBER


OCTOBER - DECEMBER 2018

  • Sales EUR 217.5 (196.7) million, up by 10.6%. In local currencies, sales grew by 13.8%.
  • Organic sales growth 1.9%*
  • Comparable EBITA EUR 34.4 (32.4) million or 15.8% (16.5%) of sales. EBITA EUR 30.2 (32.7) million or 13.9% (16.6%) of sales.
  • Comparable earnings per share EUR 0.50 (0.51). Earnings per share EUR 0.42 (0.52).
  • Cash flow from operating activities EUR 71.6 (69.7) million and cash flow after investments EUR -119.7 (19.4) million, excluding acquisitions EUR 20.6 (19.4) million.

JANUARY - DECEMBER 2018

  • Sales EUR 779.8 (729.5) million, up by 6.9%. In local currencies, sales grew by 10.5%.
  • Organic sales growth 6.1%*
  • Comparable EBITA EUR 130.1 (120.0) million or 16.7% (16.5%) of sales. EBITA EUR 124.0 (120.7) million or 15.9% (16.5%) of sales.
  • Comparable earnings per share EUR 2.05 (1.87). Earnings per share EUR 1.90 (1.89).
  • Cash flow from operating activities EUR 195.5 (186.5) million and cash flow after investments EUR -150.4 (33.1) million, excluding acquisitions and disposals EUR 9.7 (14.2) million.
  • The Board of Directors proposes a dividend of 0.90 (0.85) per share

SIGNIFICANT EVENTS DURING AND AFTER THE FOURTH QUARTER

  • On 19 December 2018, Cramo announced that the Board of Directors of Cramo has decided to pursue towards spin-off of the Company’s Modular Space business to Cramo's existing shareholders. The transaction and separate listing is expected to take place in Nasdaq Stockholm latest in the third quarter of 2019.
  • Cramo completed the acquisition of Nordic Modular Group Holding AB (NMG) on 31 October 2018. The transaction was financed with bank loans and convertible note agreements.
  • Mr Hartwig Finger was appointed Executive Vice President, Central Europe and member of the Cramo Group management team on 23 November 2018. Mr Hartwig Finger has since mid-June 2018 been acting as an interim Executive Vice President, Cramo Central Europe.

CEO LEIF GUSTAFSSON

Cramo’s 2018 was a year of solid sales growth, acquisitions in both of our divisions and a successful performance improvement in Modular Space business. All Group level financial targets were achieved in the financial year 2018. In addition, growth targets regarding the Equipment Rental division’s sales as well as Modular Space division’s rental sales were achieved. The market environment was good for both of our business divisions, which further supported the organic sales growth of 6.1% for the full year. Group’s comparable EBITA increased by 8.3% to EUR 130.1 million and full-year profitability improved. During the last quarter, we successfully completed the acquisition of the Swedish-based Nordic Modular Group Holding AB (“NMG”), which strengthens the Modular Space division both in terms of market position and business model expansion.

The Equipment Rental division’s performance varied between the countries in the last quarter of the year. Sales remained at the previous year’s level in Sweden. Norway continued on a profitable growth track. In most of our Eastern and Central European countries, sales and profitability improved, whereas the underlying performance in Germany continued to be not satisfying. In Finland, the result was still weighed down by a tightened competition, which affected prices and sales. However, Finland’s profitability improved from the previous quarter. Performance improvement measures continues in both Germany and Finland.

In the Modular Space division, the fourth-quarter organic rental sales were 13.5% higher than in the previous year. Total rental sales increased by 37.3% and were supported by acquisitive growth as NMG was consolidated in the division’s figures for the first time from 31 October onwards. Comparable EBITA increased by 28.8%. In the last quarter, the division’s profitability was diluted by cost provisions related to certain integration and restructuring measures. Excluding these one-off factors, the performance improvement actions taken during the past years contributed to profitability.

As announced in December, the Board of Directors of Cramo decided to pursue towards spin-off of the Company’s Modular Space business to Cramo's existing shareholders. The transaction and separate listing is expected to take place in Nasdaq Stockholm latest in the third quarter of 2019. I am looking forward to the year ahead as we aim towards utilizing the full-potential of both of our business divisions in order to maximize the shareholder value.

The 2019 equipment rental market outlook remains still positive despite increased economic uncertainties. In Sweden and Finland, the rental market still shows growth due to growth outside new residential building construction. In the Eastern European countries market growth is expected to remain strong. The Modular Space outlook remains positive within all segment’s operating countries.

BRIEFING

A press conference for analysts and media will be held on Friday 8 February 2019 at 11.00 am (EET) at Kämp Kansallissali, Aleksanterinkatu 44 A, 2nd floor, Helsinki.

CEO Leif Gustafsson and CFO Aku Rumpunen will present Cramo’s January-December 2018 Business Review.
Philip Isell Lind af Hageby, will be presenting Modular Space/the future Adapteo Group

The news conference can be viewed live on the internet at www.cramogroup.com

KEY FIGURES AND RATIOS (MEUR)10-12/1810-12/17Change %1-12/181-12/17Change %
       
Sales217.5196.710.6%779.8729.56.9%
Comparable EBITA*34.432.46.2%130.1120.08.3%
% of sales15.8%16.5% 16.7%16.5% 
EBITA30.232.7-7.7%124.0120.72.8%
% of sales13.9%16.6% 15.9%16.5% 
Comparable profit for the period*22.222.7-2.2%91.283.39.5%
Profit for the period18.923.0-18.2%84.784.20.5%
Comparable earnings per share (EPS), EUR*0.500.51-2.4%2.051.879.3%
Earnings per share (EPS), EUR0.420.52-18.4%1.901.890.3%
Comparable ROCE, %*, **   11.0%11.8% 
ROCE, %**   10.5%11.8% 
Comparable ROE, %*   15.7%15.4% 
ROE, %   14.7%15.6% 
Net debt / EBITDA ***   2.881.65 
Net interest-bearing liabilities   703.5382.384.0%
Gross capital expenditure (incl. acquisitions)316.454.5480.1%516.8213.9141.7%
of which acquisitions/business combinations270.0  313.29.4 
Cash flow from operating activities71.669.72.7%195.5186.54.8%
Cash flow after investments-119.719.4 -150.433.1 
Average number of personnel (FTE)   2 7532 5388.5%

Calculation of key figures presented in page 33
* Items affecting comparability, see pages 29-30
** Cramo changed the calculation method of ROCE’s capital employed component into 12 months average in Q4’2018. The change has been applied into comparison figures. 12-month average reflects better the long-term development of capital employed compared to previous 2-point average calculation.
*** Proforma Net debt / EBITDA 2.63 (including full year NMG’s and KBS’ proforma EBITDA)

GROUP PERFORMANCE

SALES

Cramo Group’s full-year consolidated sales totalled EUR 779.8 (729.5) million, showing an increase of 6.9% (+10.5% in local currencies). Sales growth was positively affected by acquisitions, which increased sales in total by EUR 45.4 million. The largest impact came from the KBS Infra and NMG acquisitions. In addition, the adoption of IFRS 15 standard on 1 January 2018 increased sales by EUR 2.9 million compared to the previous year related to revenue recognition on partially completed projects. The divestment of the Danish equipment rental operations and Latvian and Kaliningrad operations in 2017 impacted negatively on sales by EUR 16.3 million compared to previous year, while the impact of the exchange rate changes on sales was EUR -24.1 million. The Group’s organic sales growth came to a solid 6.1% and was particularly supported by Equipment Rental Scandinavia and Modular Space.
Sales in the fourth quarter increased by 10.6% (13.8% in local currencies) and amounted to EUR 217.5 (196.7) million. Sales growth was positively affected by the NMG acquisition on 31 October, which increased sales in total by EUR 12.8 million. The adoption of the IFRS15 standard did not have a material impact on the fourth-quarter sales. The Group’s organic sales growth for the quarter stood at 1.9%. All Equipment Rental division’s segments contributed positively to the Group’s organic sales growth, whereas in Modular Space sales were below the previous year’s level mainly due to the timing of the project deliveries.

RESULT

Cramo Group’s full-year comparable EBITA came to EUR 130.1 (120.0) million, showing an increase of 8.3%. Increase was supported by the acquisitions of KBS Infra and NMG. Comparable EBITA margin was 16.7% (16.5%) of sales. Profitability improved mainly due to organic sales growth in the Modular Space and Equipment Rental Scandinavia segments. In addition, performance improvement actions carried out in Modular Space are also showing positive results. The adoption of the IFRS 15 standard increased the portion of rental-related sales in the Group’s and Modular Space’s sales and, therefore, had a slight negative impact of 0.3 percentage points on the Group’s gross margin and 0.1 percentage points on the Group’s EBITA-margin compared to the previous year. In January–December, items affecting comparability of EBITA amounted to EUR -6.0 million and were related to the advisory and transaction costs of the KBS Infra and NMG acquisitions as well as advisory costs regarding the ongoing preparations of the spin-off of the Modular Space business. In 2017, EBITA included items affecting comparability to a total of EUR 0.6 million related to net gain on sale of divested operations. Full-year EBIT was EUR 119.5 (117.3) million. Net financial expenses were EUR 14.2 (12.0) million. Group’s finance net included EUR -1.4 million of items affecting comparability. The costs were related to foreign exchange hedging of NMG purchase price. Profit before taxes totalled EUR 105.3 (105.2) million and profit for the period was EUR 84.7 (84.2) million.
Comparable EBITA for the fourth quarter increased by 6.2%, totalling EUR 34.4 (32.4) million or 15.8% (16.5%) of sales. The EBITA increase was positively impacted by the NMG acquisition, which increased EBITA by EUR 2.1 million. Profitability improved in all other Equipment rental segments except in Scandinavia. Modular Space segment’s profitability was diluted by cost provisions related to certain integration and restructuring measures amounting to EUR 2.1 million. The Group EBITA included EUR -4.2 million non-allocated items affecting comparability in October–December 2018. The costs were related to advisory costs regarding ongoing spin-off process of the Modular Space business. In 2017, fourth-quarter EBIT included items affecting comparability to a total of EUR 0.3 million related to sales gain of divested operations. Fourth-quarter EBIT decreased mainly due to abovementioned cost items and was EUR 28.7 (31.8) million. Net financial expenses were EUR 3.7 (3.1) million. October–December profit before taxes totalled EUR 24.9 (28.7) million and profit for the period EUR 18.9 (23.0) million.
Comparable earnings per share for the full financial year improved to EUR 2.05 (1.87) and earnings per share was EUR 1.90 (1.89). The corresponding figures for the fourth quarter were EUR 0.50 (0.51) and EUR 0.42 (0.52) respectively. Return on equity (rolling 12 months) came to 14.7% (15.6%). Comparable return on equity (rolling 12 months) was 15.7% (15.4%).

MARKET OUTLOOK

The European Rental Association (ERA) forecasts that the equipment rental market will grow in 2019 in all of Cramo’s operating countries within the scope of ERA’s forecast varying approximately between 4 to 6%. Forecon estimates that the equipment rental market will grow in 2019 by 3 % in Finland, 1% in Sweden and 2% in Estonia and 6% in Lithuania.
In equipment rental, changes in demand usually follow the construction market with a delay. The construction market outlook for the year 2019 includes large country-specific differences. According to Euroconstruct November 2018 estimates, the construction market will decrease by 3.8% in Sweden and by 1.2% in Finland mainly due to a decline in residential construction. In Norway, construction market is expected to grow by a solid 4%. In Germany and Austria, growth is forecasted to be 0.1-1.5%. Growth is rapid in the Czech Republic, Slovakia, Hungary and Poland, where Euroconstruct estimates on average 9.1% market growth. Forecon’s construction market growth estimate for Lithuania and Russia is approximately 2-4% whereas in Estonia the market is forecasted to decline slightly by 1%. The Sveriges Byggindustrier is projecting that the Swedish construction market will decline by 3% according to their latest October estimate. The Confederation of the Finnish Construction Industries forecasted in October that the peak in the construction market is expected to be reached in 2019 and a slight decrease is projected thereafter.

BOARD OF DIRECTORS' PROPOSAL FOR PROFIT DISTRIBUTION

Cramo Plc’s goal is to follow a stable profit distribution policy and to pay approximately 40% of earnings per share (EPS) for a period as a dividend. On 31 December 2018, Cramo Plc’s total distributable funds were EUR 193,437,462.07 including EUR 50,256,295.43 of retained earnings. The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.90 (0.85) be paid for the financial year 2018. The Annual General Meeting is planned for Thursday, 28 March 2019.


PUBLICATION OF FINANCIAL INFORMATION IN 2019

The Annual report containing the full financial statements for 2018 will be published on the company’s website in week 10/2019.

The Annual General Meeting 2019 will take place on Thursday, 28 March 2019 in Helsinki.

Cramo will publish its Half Year Financial Report and two Business Reviews in 2019 as follows:
• 2 May 2019: Business Review for January-March 2019
• 30 July 2019: Half Year Financial Report for January-June 2019
• 31 October 2019: Business Review for January-September 2019

CRAMO PLC

Leif Gustafsson
President and CEO

Further information:

Mr Leif Gustafsson, President and CEO, tel. +358 10 661 10
Mr Aku Rumpunen, CFO, tel: 358 10 661 10, +358 40 556 3546
Mr Mattias Rådström, SVP, Communication, Marketing and IR, tel. + 46 70 868 7045



Distribution:
Nasdaq Helsinki Ltd.
Main media
www.cramogroup.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 about 300 depots in fourteen countries. With a group staff around 2,500, Cramo's consolidated sales in 2017 was EUR 729.5 million. Cramo shares (CRA1V) are listed on Nasdaq Helsinki Ltd.

Read more: www.cramogroup.com    www.twitter.com/cramogroup  



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