Cramo maintains momentum but halts spending

Cramo continued to grow its rental businesses in all areas during the third quarter of the year, with sales increasing 20.7% to €155.7 million (including acquisitions). The company said it saw a deteriorating business environment in the quarter but claimed its performance was proof of its strong market position in the Nordic area and in the developing areas of Eastern and Central Europe.

The company said it would take an "investment holiday" for the rest of 2008 and the whole of 2009, spending little on either expansion or replacement of equipment, and instead focus on optimising the use of its existing fleet.

Operating profit for the quarter grew by 8.4% to €32.2 million, while sales for the first nine months of the year increased by 23.8% to €436.5 million, with operating profits up 15.6% to €77.2 million. Cramo reconfirmed its sales growth guidance at above 18% and EBITA (earnings before interest, tax and amortization) above 18% of sales in 2008.

Cramo said profitability in the third quarter improved in Finland and Sweden, but weakened in Western Europe (Norway and Denmark) and also in Central and Eastern Europe. However, it said profitability in these developing areas had improved compared to the first half of the year.

The company said construction volumes would fall in the Nordic region and the Baltic States in 2009; "Cramo anticipates, however, that the impact on the demand for rental services will not be as severe as it is feared to be in construction in general. This is related to increasing penetration rates, increased equipment outsourcing, and growth in the demand for rental-related services.

"Continued growth is also anticipated in the demand for modular space, supported by relocations, demographic changes and the industry's and public administration's needs for increasingly flexible space solutions", said the company, "In a cyclical downturn, rental services provide an attractive alternative to purchasing new equipment...At the same time, there is a permanent pent-up demand for construction in Central and Eastern Europe."