Ramirent profitable but outlook remains gloomy

Ramirent said the outlook for the rest of the year remained gloomy, with construction volumes declining and the rental equipment market expected to remain difficult.

Magnus Rosén, Ramirent's chief executive officer, said the company's cost cutting measures and restricted capital expenditure had delivered healthy cash flow and "resilient" operating profit for the second quarter of €13.5 million.

Around 772 staff have lost their jobs since the cost reduction programme started last Autumn, and Mr Rosén said another 165 job losses were anticipated in the second half of the year. This will take Ramirent's total workforce to 3100, a quarter down on the 4134 employed in June 2008.

"The market environment remains however difficult", said Mr Rosén, "We will maintain our focus on implementing cost saving actions, continuing to right-size our fleet and re-allocating fleet capacity between markets to support utilisation. Contingency plans are in place to address the risk of further market decline and we are ready to take further actions if necessary."

The biggest fall in revenues - 49% - was recorded in Ramirent's Europe East territory (Russia, Estonia, Latvia, Lithuania and Ukraine), followed by Norway (down 35%), Sweden (-28%), Denmark (-23%), Central Europe (Poland, Hungary, the Czech Republic and Slovakia) (down 22%) and Finland (-14%). Norway, Sweden and Finland represent over 70% of total revenues.

Ramirent said; "Construction activity slowed dramatically in the Baltic States as well as in Ukraine and in Russia. In the Nordic region, the Danish and Norwegian markets remained silent, and signs of a significant contraction were seen also in Finland and Sweden.

"Construction output contracted in Czech Republic and Slovakia, and also in Poland in the second quarter. In Hungary, the recession continued and construction activity remained on a low level. In all Ramirent countries, low visibility and high uncertainty continued due to the global economic slowdown."

Ramirent spent just €7.3 million (gross) on new equipment in the first six months of the year compared to €172.1 million in the same period in 2008.