Vantaa, Finland, 2017-02-07 08:00 CET (GLOBE NEWSWIRE) -- Cramo Plc Financial Statements Bulletin 7 February 2017, at 9.00 am (EET)
Cramo's Financial Statements Bulletin for January-December 2016
Profitability improvement throughout the year
- Sales EUR 192.9 (187.2) million, up by 3.1%. In local currencies, sales grew by 5.1%.
- Comparable EBITA EUR 32.6 (27.0) million and comparable EBITA margin 16.9% (14.4%)
- EBITA EUR 28.2 (26.1) million and EBITA margin 14.6% (14.0%)
- Comparable earnings per share EUR 0.51 (0.39); earnings per share EUR 0.35 (0.37)
- Cash flow from operating activities EUR 58.2 (73.5) million and cash flow after investments EUR 16.8 (37.0) million
- Cramo Group will change its financial reporting practices and in 2017, it will publish Business Reviews for the first three and nine months of the year instead of interim reports.
- Sales EUR 712.3 (667.9) million, up by 6.6%. In local currencies, sales grew by 7.7%.
- Comparable EBITA EUR 111.1 (86.8) million and comparable EBITA margin 15.6% (13.0%)
- EBITA EUR 106.7 (84.8) million and EBITA margin 15.0% (12.7%)
- Comparable earnings per share EUR 1.70 (1.17); earnings per share EUR 1.54 (1.13)
- Comparable return on equity 14.9% (10.9%); return on equity 13.6% (10.5%)
- Cash flow from operating activities EUR 172.2 (174.9) million and cash flow after investments EUR 7.3 (35.6) million
- Gearing 74.5% (75.1%)
- The Board of Directors proposes a dividend of EUR 0.75 (0.65) per share
(Comparable figures excludes items affecting comparability, see page 3)
CHANGES IN ORGANISATION DURING THE FOURTH QUARTER
- Mr Aku Rumpunen was appointed Cramo’s CFO as of 21 December 2016.
CHANGE IN GUIDING PRINCIPLES
- As of 2017, and relating to Cramo’s new strategy, the company has changed its guidance policy and will discontinue to provide numerical guidance on sales and EBITA profitability on group level. More information will be provided on Capital Markets Day on 16th February 2017.
CEO LEIF GUSTAFSSON'S COMMENT
Profitability improvement continued
2016 was a successful year for Cramo Group. The demand for equipment rental and modular space developed favourably, and we succeeded in increasing sales and EBITA result in both product areas. We also achieved all targets set for the strategy period 2014–2016.
Our full-year sales grew in local currencies by 7.7% and fourth-quarter sales by 5.1%. In local currencies, sales grew in all markets, with the exception of Norway and Eastern Europe. As for product areas, modular space sales growth was driven throughout the year by high number of new modular space deliveries.
Our profitability also continued to develop favourably. Our full-year comparable EBITA margin increased from 13.0% to 15.6% and fourth-quarter comparable EBITA margin from 14.4% to 16.9%. Full-year comparable profitability improved in all markets, with the exception of Norway and Eastern Europe. I am particularly satisfied with the fact that the Central European operations turned profitable for the full year. Profit development also continued to be strong in Finland and Sweden as well as in the entire equipment rental product area. In addition to the favourable market situation, factors contributing to the good result included the successful implementation of our strategy and the correct allocation of investments.
I expect the demand for equipment rental and modular space to stay on a good level in 2017. Over the long term, the demand for rental services is supported by several megatrends, such as urbanisation and efforts to achieve sustainable development. Indeed, one of our most significant development projects has been to clarify our sustainable development strategy so that it is taken into account as thoroughly as possible in all of our operations.
In 2016, we started preparing our new strategy. As part of this process we are reviewing the development and performance of our business operations on all markets to improve profitability. Our target is to turn Cramo into a more efficient operator in the equipment rental and modular space markets. I believe that Cramo’s strong position on most of our markets provides good opportunities for this.
SUMMARY OF FINANCIAL PERFORMANCE
|KEY FIGURES AND RATIOS (MEUR)||10-12/16||10-12/15||Change %||1-12/16||1-12/15||Change %|
|Sales||192.9||187.2||3.1 %||712.3||667.9||6.6 %|
|EBITDA||60.8||51.9||17.1 %||218.7||185.7||17.8 %|
|Comparable EBITA 1)||32.6||27.0||20.7 %||111.1||86.8||27.9 %|
|% of sales||16.9%||14.4%||15.6%||13.0%|
|EBITA 1)||28.2||26.1||8.0 %||106.7||84.8||25.8 %|
|% of sales||14.6%||14.0%||15.0%||12.7%|
|Operating profit (EBIT) 2)||23.9||24.2||-1.4 %||98.7||76.7||28.7 %|
|Profit before taxes (EBT)||20.4||21.3||-4.2 %||86.9||63.8||36.2 %|
|Profit for the period 3)||15.4||16.6||-7.3 %||68.6||49.7||37.9 %|
|Share related information|
|Comparable earnings per share (EPS), EUR 3)||0.51||0.39||28.5 %||1.70||1.17||45.5 %|
|Earnings per share (EPS), EUR||0.35||0.37||-7.5 %||1.54||1.13||36.8 %|
|Earnings per share (EPS), diluted, EUR||0.34||0.37||-8.0 %||1.53||1.12||36.6 %|
|Shareholders’ equity per share, EUR||11.69||11.05||5.8 %|
|Return on investment, %||11.2 %||9.0 %|
|Return on equity, % 4)||13.6 %||10.5 %|
|Equity ratio, %||45.6 %||45.7 %|
|Gearing, %||74.5 %||75.1 %|
|Net interest-bearing liabilities||387.0||368.4||5.1 %|
|Net debt / EBITDA||1.77||1.98||-10.6 %|
|Gross capital expenditure (incl. acquisitions)||47.8||40.7||17.5 %||207.3||175.0||18.4 %|
|of which acquisitions/business combinations||0.0||1.3||-100.0 %||4.4||9.8||-55.0 %|
|Cash flow from operating activities 5)||58.2||73.5||-20.8 %||172.2||174.9||-1.6 %|
|Cash flow after investments||16.8||37.0||-54.5 %||7.3||35.6||-79.4 %|
|Average number of personnel (FTE)||2,550||2,486||2.6 %|
|Number of personnel at period end (FTE)||2,562||2,473||3.6 %|
|Items affecting comparability (MEUR)||10-12/16||10-12/15||Change-%||1-12/16||1-12/15||Change-%|
|Operating profit (EBIT) 2)||-7.5||-0.8||-7.5||-2.0|
|Profit for the period 3)||-7.1||-0.8||-7.1||-1.8|
|Cash flow effect||0.0||-0.8||0.0||-1.8|
- Items affecting comparability of EBITA were EUR 4.3 million in the fourth quarter 2016. Items were related to negative impact of impairments EUR 4.8 million from Danish equipment rental operations and Latvian and Lithuanian operations and positive impact of EUR 0.5 million from reclassification of loans in Fortrent group. Third quarter 2015 included EUR 1.2 million in costs relating to the change of President and CEO. The fourth quarter 2015 included EUR 0.8 million in costs relating to restructuring in Central Europe. Items had no cash flow effect.
- In addition to above, items affecting comparability of EBIT were EUR 3.2 million in the fourth quarter 2016. Items were related to negative impact of impairments of intangible assets EUR 3.2 million from Danish equipment rental operations and Latvian and Lithuanian operations. Items had no cash flow effect. Full year comparable EBIT excluding items affecting comparability was EUR 106.2 (78.7) million. The fourth quarter comparable EBIT was EUR 31.4 (25.1) million.
- In addition to above, items affecting comparability of profit for the period were EUR 0.4 million in fourth quarter 2016 related to tax impact of the items. Profit for the period excluding these items was EUR 75.6 (51.5) million. Comparable earnings per share is calculated without the impact of these items.
- Comparable return on equity excluding above items affecting comparability were 14.9% (10.9%)
- Starting from 2016, the reporting line of unpaid investments in the cash flow statement has been changed. As a result, the operating cash flow for the period 1–12/2015 decreased by EUR 8.0 million and for the period 10-12/2015 increased by EUR 2.2 million respecitively.
Calculation of key figures is presented on page 27.
Cramo Group’s full-year consolidated sales were EUR 712.3 (667.9) million, showing an increase of 6.6%. In local currencies, sales grew by 7.7%.
Sales grew by 16.5% in Finland, by 7.4% in Sweden (8.7% in the local currency), by 13.2% in Denmark and by 1.6% in Central Europe. Sales decreased by 4.3% in Norway (a change of -0.7% in the local currency) and by 1.1% in Eastern Europe (a change of -0.3% in local currencies).
As for product areas, sales growth was 4.7% (5.9% in local currencies) for equipment rental and 17.6% (18.6% in local currencies) for modular space. Plenty of new modular space deliveries took place during the year, which increased the sales of assembly services in particular.
Rental sales of modular space increased by 10.8%.
In the fourth quarter, the Group’s consolidated sales were EUR 192.9 (187.2) million, growing by 3.1%. In local currencies, sales grew by 5.1%. Sales grew by 17.6% in Finland, by 4.7% in Denmark, by 11.8% in Norway (8.9% in the local currency) and by 3.5% in Eastern Europe (4.1% in local currencies). Sales decreased by 1.7% in Sweden (an increase of 2.7% in the local currency), and by 3.5% in Central Europe.
As for product areas, sales growth during the fourth quarter was 3.0% (5.1% in local currencies) for equipment rental and 3.2% (5.3% in local currencies) for modular space.
The Group costs as a share of sales decreased both in the fourth quarter and during the entire financial year, which had a positive impact on profitability. During the financial year, direct costs (materials and services) as a share of sales reduced from 35.4% to 33.6%. Indirect costs (employee benefit expenses and other operating expenses) as a share of sales decreased from 38.8% to 38.3%. Indirect costs for 2015 included EUR 2.0 million in costs relating to the change of President and CEO and operational restructuring in Central Europe. Depreciation and impairment on tangible assets in relation to sales increased from 15.1% to 15.7%. In the fourth quarter of 2016, a EUR 4.8 million impairment was recorded on Latvian and Lithuanian operations and Danish equipment rental operations.
The result and profitability for 2016 improved year-on-year. Comparable profitability improved on all markets, with the exception of Norway and Eastern Europe. Comparable EBITA was EUR 111.1 (86.8) million and comparable EBITA margin was 15.6% (13.0%).
Comparable EBITA was EUR 90.5 (65.7) million, or 15.2% (11.6%) of sales, for equipment rental and EUR 30.8 (29.5) million, or 26.2% (29.5%) of sales, for modular space. Modular space EBITA margin was negatively affected by the significant proportion of assembly and disassembly services, high repair activity and measures taken to support further growth.
Comparable earnings per share for the financial year were EUR 1.70 (1.17). Comparable return on equity (rolling 12 months) improved and was 14.9% (10.9%).
Full-year cash flow from operating activities decreased and was EUR 172.2 (174.9) million. The following items affected negatively on cash flow in comparison to 2015. The group received tax refund of EUR 8.3 million in 2015. Change in net working capital had a positive effect by EUR 11.4 million on cash flow in 2015 compared to negative impact of EUR 1.5 million in 2016. Also cash flow of net financial items were lower by EUR 8.0 million compared to 2015 due to timing difference in realisation of foreign exchange differences arising from the hedged exposure and the hedging instruments. Cash flow after investments was EUR 7.3 (35.6) million. Fleet investments were increased and gross capital expenditure was EUR 207.3 (175.0) million.
The Group’s gearing was 74.5% (75.1%) at the end of 2016. Net debt per EBITDA stood at 1.77 (1.98) at the end of the year.
In the fourth quarter, comparable EBITA was EUR 32.6 (27.0) million and comparable EBITA margin was 16.9% (14.4%) of sales. Comparable profitability improved on all markets, with the exception of Norway.
In the fourth quarter, comparable EBITA was EUR 27.6 (20.8) million, or 17.1% (13.2%) of sales, for equipment rental. For modular space, EBITA was EUR 8.2 (7.9) million, or 26.0% (25.8%) of sales. For modular space, EBITA and EBITA margin were negatively affected by the significant proportion of assembly services during the period, periodically high repair activity and measures taken to support further growth.
In the fourth quarter, cash flow from operating activities decreased and was EUR 58.2 (73.5) million. Cash flow after investments was EUR 16.8 (37.0) million. Fleet investments were increased and gross capital expenditure was EUR 47.8 (40.7) million.
Proposal for profit distribution
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.75 (0.65) be paid for the financial year 2016.
Construction market is estimated to have increased in 2016 in all Nordic countries as well as in Germany and Austria. According to Euroconstruct’s estimate, growth was nearly 7% in Finland, Sweden and Norway. In Denmark, Germany and Austria, construction increased by approximately 1.6–2.5%. In Poland, the Czech Republic, Slovakia, the Baltic countries and Russia, construction decreased.
The demand for equipment rental services usually follows the development of construction with a delay. In addition to construction volume, the demand is affected by industrial investments and the increase in the rental penetration rate. Tightening legislation and the requirement to improve the efficiency and quality of construction increase the need for different types of rental-related services.
The demand for modular space is boosted by the increase in the need for and popularity of modifiable and easily implementable space solutions. Demand is increased by migration flows within countries and changes in demographics. Cramo believes that the long-term demand for both equipment rental and modular space is also supported by megatrends, such as urbanisation, the sharing economy and the increasing emphasis on sustainability.
According to its June forecast, the European Rental Association (ERA) expected the use of equipment rental services to increase in 2016 in all of Cramo’s markets reported by ERA.
According to Cramo’s estimates, the demand for modular space has increased in the Nordic countries by nearly 6% per year during the past five years.
In Cramo countries, the construction market outlook for 2017 is mainly positive. The construction market analysts Euroconstruct and Forecon estimate that construction will increase in all of Cramo’s operating countries with the exception of the Czech Republic, Lithuania and Russia. Construction market is estimated to grow approximately 1 – 3 % in Finland, Sweden, Norway and Denmark and Germany. However, Swedish Construction Federation (Sverige’s Byggindustrier) estimates 5% growth for Sweden. ERA forecasts that the equipment rental market will grow in all of Cramo’s operating countries that are within the scope of ERA’s forecast.
(All construction market forecasts presented in this review are estimates by Euroconstruct, unless otherwise stated.)
Cramo will hold a briefing and a live webcast at Kämp Kansallissali, address: Aleksanterinkatu 44 A, 2nd floor, Helsinki, on Tuesday, 7 February 2017 at 11.00 am. The briefing will be in English.
PUBLICATION OF FINANCIAL INFORMATION IN 2017
The Annual Report containing the full financial statements for 2016 will be published in electronic format in week 10/2017.
Cramo Plc’s 2017 Annual General Meeting will take place on Thursday, 30 March 2017, in Helsinki.
In 2017, Cramo will publish three financial reviews:
Business Review January–March 2017 on 28 April 2017
Half Year Financial Report January–June 2017 on 26 July 2017
Business Review January–September 2017 on 25 October 2017.
President and CEO
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 Investor Relations, tel: +46 70 868 7045
Nasdaq Helsinki Ltd.
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 fifteen countries and in about 330 depots. With a group staff around 2.500, Cramo's consolidated sales in 2015 was EUR 668 million. Cramo shares are listed on the Nasdaq Helsinki Ltd.