Close

Cramo's Financial Statements Bulletin for January-December 2019

Cramo Plc     Financial Statements Bulletin     11 Feb 2020 at 9.00 am EET

Cramo's Financial Statements Bulletin for January-December 2019

Cash flow improved but challenging market impacted profitability

OCTOBER–DECEMBER 2019

JANUARY–DECEMBER 2019

GUIDANCE FOR 2020

Cramo estimates its comparable EBITA will be above EUR 75 million in 2020.

BOELS PUBLIC TENDER OFFER FOR ALL CRAMO SHARES

Boels Topholding B.V. and Cramo Plc entered into a combination agreement on 11 November 2019, pursuant to which Boels made a voluntary recommended public cash tender offer to purchase all of the issued and outstanding shares in Cramo that are not owned by Cramo or any of its subsidiaries. In the tender offer, Cramo’s shareholders were offered a cash consideration of EUR 13.25 for each share. The Board unanimously recommended that the shareholders accept the tender offer.

The offer period under the tender offer commenced on 25 November 2019 and was set to continue until 9 January 2020. On 10 January, Boels extended the offer period to continue until 31 January 2020. On 17 January, Boels increased the offer price to EUR 13.75 for each share.

On 3 February 2020 the preliminary results of Boels’ voluntary recommended public cash tender offer for all shares in Cramo Plc were announced. Tendered shares represented approximately 92.89% of all the shares and votes in Cramo.

On 5 February 2020 final results of Boels’ recommended voluntary public cash tender offer for all shares in Cramo Plc were announced and Boels completed the tender offer and commenced a subsequent offer period. According to the final results of the tender offer, the shares tendered represent approximately 93.04% of all the issued and outstanding shares and votes in Cramo. Subsequent offer period commenced on February 6, 2020 and will expire on February 20, 2020.   

On 6 February 2020, Cramo Plc has received a notification pursuant to Chapter 9, section 5 of the Securities Markets Act ("SMA") from EQT Fund Management S.à r.l (Luxembourg, Grand Duchy of Luxembourg), acting in its own name and as the management company of EQT Public Value Fund and on behalf of EQT Public Value Fund, according to which EQT Public Value Investments S.à r.l.’s total holding of shares in Cramo Plc has fallen below the thresholds of ten (10) and five (5) percent on 6 February 2020. According to the notification, the reason for the notification was disposal of shares or voting rights. As at the date of the notification, the company held no shares, financial instruments or voting rights in Cramo.

On 6 February 2020, Cramo Plc has received a notification pursuant to Chapter 9, section 5 of the Securities Markets Act ("SMA") from Peter Bernard Marcel Boels (Maaseik, Belgium) according to which Boels Topholding B.V.’s total holding of shares in Cramo Plc has exceeded the threshold of ninety (90) percent on 6 February 2020. According to the notification, the reason for the notification was an acquisition of shares or voting rights. As at the date of the notification, the company held 41,574,765 shares and 93.03% of Cramo Plc’s share capital and voting rights.

On 6 February 2020, Cramo Plc notified holders of its notes due 2022 of a Change of Control. Reference is made to Cramo's EUR 150 million 2.375 per cent fixed-rate notes due 28 February 2022. Cramo shall on 9 April 2020 prepay the principal amount of and the interest then accrued on the notes, but without any premium or penalty, held by the noteholders of the notes who have by written notice required prepayment of the notes held by them. If notes representing more than seventy-five (75) per cent of the aggregate principal amount of the notes have been prepaid on 9 April 2020 pursuant to Condition 10 of the terms and conditions of the notes, Cramo is entitled to prepay also the remaining outstanding notes at their principal amount with accrued interest but without any premium or penalty.

On 7 February 2020, Cramo Plc announced that Boels Topholding B.V. will commence redemption proceedings in respect of the remaining minority shares in Cramo Plc. To implement the redemption of the shares, the offeror will initiate arbitration proceedings as provided in the Finnish Companies Act. In such redemption proceedings, the offeror will demand that the redemption price for the shares is set to EUR 13.75 per share, reduced by any distribution of funds, if the record date for such distribution of funds occurs before the shares subject to redemption have been transferred to Boels, which corresponds to the consideration paid by the offeror in the tender offer in accordance with the terms and conditions of the tender offer. It is expected that the offeror will in due course initiate measures to delist the Cramo shares from the official list of Nasdaq Helsinki Ltd.


CEO LEIF GUSTAFSSON'S COMMENT

Cramo’s fourth quarter performance fell behind the previous year, as expected, and comparable EBITA decreased in all segments. However, the cash flow generation continued to be strong during the quarter and cash flow after investments was EUR 36.9 million, being EUR 15.3 million above last year.

To improve our competitiveness and profit generation going forward, a group-wide performance enhancement programme was largely implemented during the second half of the year. The first results were actualised already in the fourth quarter as comparable indirect costs decreased by EUR 2.8 million from last year. Full run-rate savings of EUR 10-12 million are expected to be realised from 2020 onwards.

The Group’s sales in the fourth quarter were lower compared to last year in comparable currencies. The market environment continued to level out or even decline compared to the previous year in many countries. In Sweden, sales decreased by 10.9% in the local currency compared to the tough comparables of 2018. This was partly caused by weaker market demand and the timing of large industrial projects. The sales contribution from the new industrial projects which was started in late 2019 was still small during the fourth quarter, but the sales and profit contribution is expected to increase during 2020. In Norway, sales development was a disappointment during the fourth quarter, whereas profitability improved. In Finland and Eastern Europe, a more challenging market situation also negatively impacted our sales and profitability, but the market outlook for 2020 is more positive especially for Finland. In Central Europe, sales continued to grow, mainly driven by KBS Infra, but profitability remained at an unsatisfactory level.

Despite short-term challenges in the market, we see many growth opportunities, particularly within selected customer segments and product areas where we have the potential to increase our presence and strengthen our market position. We have now reshaped our company after the spin-off of Adapteo, streamlined our cost base, started the implementation of our new strategy Cramo NXT and set the foundation to differentiate ourselves from the competition. Through our innovative solutions, digitalised offering and committed employees, we are well positioned to capture the opportunities of changing markets and customer needs. In 2020, we will invest in growth opportunities and take the benefit from our streamlined cost base to secure the performance guidance, and so that EBITA will be above EUR 75 million.

Looking into the future, Cramo will, as a result of the successful tender offer, be delisted and become part of Boels Rental. The combination of Cramo and Boels will create a more competitive organisation that is better positioned for greater growth, increased profitability and with the necessary financial strength to better manage the market challenges and level out economic volatility. The combination is a great strategic fit and utilises the strengths of each respective company. Factors such as the complementary geographical footprint, a stronger combined presence in mainland Europe, the optimised portfolio of products and services offered by joint operations and the improved rental expertise through the combination of first-rate teams are examples of how the combined company will be a true European rental leader in quality and scale.

I want to thank all of our personnel for their commitment in developing Cramo into one of the top companies in the rental industry. I would also like to thank all of Cramo’s customers, shareholders and other stakeholders over the years, who placed their trust in us as a publicly listed company.
            

KEY FIGURES

KEY FIGURES AND RATIOS (MEUR)Continuing operations
Reported
10-12/1910-12/18Change %1-12/191-12/18Change %
       
Sales156.7172.4-9.1%612.6631.9-3.0%
EBITDA45.749.5-7.7%195.8185.55.6%
Comparable EBITA 1)19.025.2-24.5%72.792.1-21.1%
% of sales12.1%14.6% 11.9%14.6% 
EBITA13.325.2-47.1%65.791.2-28.0%
% of sales8.5%14.6% 10.7%14.4% 
Comparable profit for the period 1)13.114.2-7.6%44.261.9-28.6%
Profit for the period6.714.4-53.4%36.761.3-40.2%
Comparable earnings per share (EPS), EUR 1)0.290.32-7.8%0.991.39-28.8%
Earnings per share (EPS), EUR0.150.32-53.5%0.821.38-40.4%
Average number of personnel (FTE)   2,6112,5462.5%

1) Excluding items affecting comparability, more information on IACs is presented on pages 31-33.

KEY FIGURES AND RATIOS (MEUR)Continuing operations
Reportedwith illustrative IFRS 16 impact*Reportedwith illustrative IFRS 16 impact*
10-12/1910-12/18Change %1-12/191-12/18Change %
       
Sales156.7172.4-9.1%612.6631.9-3.0%
EBITDA45.757.8-20.9%195.8215.5-9.1%
Comparable EBITA 1)19.025.9-26.5%72.794.8-23.3%
% of sales12.1%15.0% 11.9%15.0% 
EBITA13.325.9-48.5%65.793.9-30.1%
% of sales8.5%15.0% 10.7%14.9% 
Comparable profit for the period 1)13.114.2-7.6%44.261.9-28.6%
Profit for the period6.714.4-53.4%36.761.3-40.2%
Comparable earnings per share (EPS), EUR 1)0.290.32-9.5%0.991.39-28.8%
Earnings per share (EPS), EUR0.150.32-53.5%0.821.38-40.4%
Comparable operative ROCE, % 1), 2), 3)   10.8 %14.0% 
Operative ROCE, % 2), 3)   9.7 %13.8% 
Comparable ROCE, % 1), 2)   8.1 %10.5% 
ROCE, % 2)   7.2 %10.4% 
Comparable ROE, % 1), 4)   10.9 %14.9% 
ROE, % 4)   9.1 %14.7% 
Net debt / EBITDA   1.921.99 
Net interest-bearing liabilities   375.9428.5-12.3%
Gross capital expenditure (incl. acquisitions) 5)21.026.0-19.3%89.3185.1-51.8%
of which acquisitions/business combinations 0.5  43.6 
Cash flow after investments36.921.670.6%108.5-8.5 
Operative capital employed 3)   644.3692.9-7.0%
Capital employed   825.5876.9-5.9%
Total assets   963.21,021.7-5.7%

* Presented 2018 figures with IFRS 16 impact are based on illustrative non-IFRS calculations from reported financial notes to form a comparison basis for IFRS 16 figures in 2019. These calculations have been implemented from the opening balance of 2017. Figures are non-IFRS additional financial information and are not to be considered as reported IFRS figures. The impact of applying IFRS 16 lessee accounting is significant for the Group’s figures, especially on the balance sheet where right-of-use assets and lease liabilities were recognised since the opening balance sheet. Together with material changes between lines of income statement and impact on net profit in a single period, the impact on the Group’s KPIs such as ROCE and net debt / EBITDA was significant.

1) Excluding items affecting comparability, more information on IACs is presented on pages 31-33.

2) Cramo changed the calculation method of (operative) ROCE’s capital employed component into 12-month average in Q4/2018. The change has been applied to comparison figures. 12-month average better reflects the long-term development of capital employed compared to the previous 2-point average calculation.

3) Operative ROCE% is calculated based on EBITA (rolling 12 months) divided by the operative capital employed (12-month average). Operative capital employed is calculated by deducting goodwill and other intangible assets from the capital employed. Operative ROCE% replaces the previously presented ROCE% to better reflect the operative performance on a segment level providing a more meaningful basis for comparison.

4) ROE% is calculated based on net result (rolling 12 months) divided by the total equity at the end of period.

5) The excluded capital expenditure for new right-of-use (RoU) assets according to IFRS 16 was EUR 16.0 million during 2019.

MARKET OUTLOOK

The European Rental Association (ERA) forecasts that the equipment rental market will grow in 2020 in all of Cramo’s operating countries, varying approximately between 4 to 5%, except in Poland and Czech Republic where the growth is forecasted to be 8% and 6%, respectively. Forecon estimates that, in 2020, the equipment rental market volume will remain at last year’s level in Sweden, and grow by 4% in Estonia, grow by 5% in Finland and grow by 6% in Norway and Lithuania.

In equipment rental, changes in demand usually follow the construction market with a delay. According to Euroconstruct November 2019 estimates, the construction market will decrease by 2% in Sweden and remain at last year’s level in Finland. The Sveriges Byggindustrier is projecting that the Swedish construction market will decline by 2% in 2020 according to their latest estimate in October 2019. In Norway, the construction market is expected to grow by 2%. In Germany and Austria, growth is forecasted to be -0.6% and 1.3%, respectively.

GROUP PERFORMANCE

SALES FOR CONTINUING OPERATIONS

Cramo Group’s full-year consolidated sales totalled EUR 612.6 (631.9) million, showing a decrease of 3.0% (-1.2% in local currencies). KBS Infra, acquired on 28 February 2018, supported sales growth. The impact of the exchange rate changes on sales was EUR -11.5 million, mainly due to the weaker Swedish Krona. The Group’s organic sales growth was EUR -14.1 million (-2.3%).

Sales decreased in the fourth quarter by 9.1% (-7.2% in local currencies) and amounted to EUR 156.7 (172.4) million. The Group’s organic sales growth for the last quarter was -7.2%. Central Europe contributed positively to the Group’s organic sales growth, while sales development in Scandinavia and Finland as well as Eastern Europe was negative compared to last year.

RESULT FOR CONTINUING OPERATIONS

Cramo Group’s full-year comparable EBITA came to EUR 72.7 (92.1) million, showing a decrease of 21.1%. Comparable EBITA margin was 11.9% (14.6%) of sales. EBITA and EBITA margin decreased in all segments. The impact of lower sales on profitability was still only partially offset by lower indirect costs, which decreased by 2.8 million compared to last year in the last quarter as a result of the cost savings programme.  

In January–December, items affecting comparability in EBITA amounted to EUR -7.0 million (see specification on IAC tables on pages 31-32). In the comparison period, items affecting comparability amounted to EUR -0.9 million and were related to the transaction costs of KBS Infra acquisition. Full year EBITA was EUR 65.7 (91.2) million. Full-year EBIT was EUR 61.5 (87.4) million. Net financial expenses were EUR 12.8 (10.2) million. Profit before taxes totalled EUR 48.8 (77.2) million and profit for the period was EUR 36.7 (61.3) million.

Comparable EBITA for the fourth quarter decreased by 24.5%, totalling EUR 19.0 (25.2) million or 12.1% (14.6%) of sales. Profitability decreased in all segments. The impact of lower sales on profitability was still only partially offset by lower indirect costs, which decreased by 2.8 million compared to last year in the last quarter as a result of the cost savings programme. In October–December, items affecting comparability in EBITA amounted to EUR -5.7 million (see specification on IAC tables on pages 31-32). Fourth quarter EBIT decreased by 50% to EUR 12.1 (24.2) million. Net financial expenses were EUR 2.2 (4.2) million. October–December profit before taxes totalled EUR 9.9 (20.0) million and profit for the period EUR 6.7 (14.4) million.

Comparable earnings per share for the full financial year were EUR 0.99 (1.39) and earnings per share EUR 0.82 (1.38). The corresponding figures for the fourth quarter were EUR 0.29 (0.32) and EUR 0.15 (0.32) respectively. The comparable return on equity (rolling 12 months) was 10.9% and return on equity (rolling 12 months) 9.1%.

 

PUBLICATION OF FINANCIAL INFORMATION IN 2020

The Annual report containing the full financial statements for 2019 will be published on the company’s website in week 10/2020.

The Annual General Meeting will be held by the end of June 2020, upon a separate notice to be issued by the Board.

Cramo Plc will change its financial reporting practise and only publish a half year financial report and a financial statements bulletin in the future. Cramo will therefore not publish the business review for January-March 2020 on 28 April 2020, or the business review for January-September 2020 on 30 October 2020, as was previously announced.

CRAMO PLC

Leif Gustafsson
President and CEO

 

Further information:

Mr Leif Gustafsson, President and CEO, tel: +358 10 661 10, email: leif.gustafsson@cramo.com
Mr Aku Rumpunen, CFO, tel: +358 40 556 3546, email: aku.rumpunen@cramo.com


Distribution:
Nasdaq Helsinki Ltd
Main media
www.cramogroup.com

Cramo is one of the leading European equipment rental services companies with revenue of EUR 613 million in 2019, serving approximately 150,000 customers through around 300 depots across 11 markets with a full range of machinery, equipment and related services. Cramo enjoys solid market position in all key markets and has a strong focus on the most sophisticated customers primarily within the renovation and new-build construction, industrial and public sector end-markets. Cramo shares (CRA1V) are listed on Nasdaq Helsinki Ltd.

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

Attachment

Attachments

cramo-q42019-english.pdf