Cramo forecasts 2009 fall but waits for opportunities

Cramo managed to maintain its revenues in the last quarter of 2008 despite weakening demand, with sales in local currencies actually rising by 6.7% in the quarter.

Sales for the year as a whole rose 16.8% to €579.8 million, although Cramo said the outlook was weakening and it did not expect to reach the same sales level in 2009.

Revenues rose modestly in all its territories - central/eastern Europe, western Europe (Norway and Denmark) and Finland - with the exception of Sweden, its largest market, where revenues fell by 5% to €57 million.

Although EBITDA profit rose by 6% to €102 million for the year, profits in the final quarter fell almost 25% to €19.8 million.

Cramo, which said it had strengthened its market position in all its operating areas, but was expecting a more difficult 2009; "The economic operating environment is expected to weaken in 2009. The Group expects the amount of construction to fall in all Nordic countries and the Baltic countries.

"Construction is expected to continue to increase in Poland, in the Czech Republic and in Slovakia, although at a lower level. The outlook for new construction has also weakened in Russia, but the growing popularity of equipment rental will support demand for rental services.

As with other rental companies, Cramo is engaged on a cost-cutting programme to prepare for lower levels of demand. Around 270 staff were layed-off last year and Cramo said reductions would continue.

The company said there were "pockets of growth" in spite of the general decline in construction, in particular in public spending on infrastructure.

The company also said that "no investments [in fleet] are needed in 2009...Rather than investing in new equipment, Cramo will focus on optimising the use of its fleet on a Group-wide basis in 2009."

Göran Carlson, Cramo's deputy chief executive officer, speaking to IRN a week before the financial results were published, said he was still optimistic about the company's prospects for the coming years; "In the 2000 recession we had continuous growth because of the underlying drivers of rental penetration. I'm optimistic in the sense that when we approach the next upturn, we will have a higher penetration."

Mr Carlson added that Cramo was preparing for opportunities to emerge as the market weakens; "We consider there will be many opportunities - acquisitions, outsourcing, assets in general will become cheaper. The winner will be the one who takes the opportunities."