Cramo Plc    Business Review 2 May 2019, at 9.00 am (EET)

Cramo's Business Review for January-March 2019

Acquisitions supporting positive sales development in the first quarter

JANUARY–MARCH 2019

• Sales EUR 200.6 (175.3) million, up by 14.4%. In local currencies, sales grew by 17.2%.
• Organic sales growth 2.4%*.
• Comparable EBITA EUR 24.1 (23.9) million or 12.0% (13.6%) of sales. EBITA EUR 20.9 (23.0) million or 10.4% (13.1%) of sales.
• Comparable earnings per share EUR 0.31 (0.35). Earnings per share EUR 0.25 (0.33).
• Cash flow from operating activities EUR 48.8 (20.8) million and cash flow after investments EUR 12.4 (-30.5) million. Cash flow after investments was impacted by the acquisition of shares of KBS Infra by EUR -17.8 million in the comparison period.

SIGNIFICANT EVENTS DURING AND AFTER THE FIRST QUARTER

• On 18 February 2019, Cramo announced that the Board of Directors has approved a demerger plan concerning the spin-off of Modular Space business into a new listed company. The completion of the partial demerger is expected to take place no later than in the third quarter of 2019.
• The Annual General Meeting decided on a dividend of EUR 0.90 per share, which was paid in April.
• Cramo Plc signed a new loan agreement of EUR 500 million for the demerging entity (Adapteo Plc). The loan agreement is related to financing commitments of the demerger plan concerning the spin-off of Modular Space business into a new listed company and shall be transferred to the demerging entity (Adapteo Plc) upon the completion of the partial demerger.
• Ms Sohana Josefsson was appointed Senior Vice President, Marketing and Communications and member of the Cramo Group Management Team on 8 April 2019.
• On 2 April, Cramo announced changes in the Group Management Team. Mr Joakim Schedvins, currently Head of Finance, Cramo AB, has been appointed as acting head of Equipment Rental Scandinavia until a permanent replacement is found. Mr Peter Bäckström, Executive Vice President, Scandinavia, and Managing Director, Cramo AB, and Mr Mattias Rådström, Senior Vice President, Communications, Marketing and Investor Relations, both members of the Cramo Group Management Team, left the company.

KEY FIGURES

* See specifications on pages 1-2 in the PDF version of the Business Review (attached to this Stock Exchange Release)

CEO’S COMMENT

Cramo’s first quarter performance was mixed. The Equipment Rental division fell short of expectations as lower than expected organic sales growth impacted on the profitability. The Modular Space division’s sales continued according to expectations, but profitability for the first quarter was negatively affected by the integration of the NMG. The Group’s organic sales growth was 2.4%, supported by both business divisions. Comparable EBITA increased by 0.8% to EUR 24.1 million and was driven by the Modular Space segment. On 18 February 2019, Cramo announced that the Board of Directors has approved a demerger plan concerning the spin-off of the Modular Space business into a new listed company. Actions related to the partial demerger are ongoing and the listing is expected to take place no later than in the third quarter of 2019.    

The Equipment Rental division’s sales growth was 5.8% in local currencies, supported by KBS acquisition. However, organic sales growth of 1.3% did not meet our expectations although sales increased compared to the previous year in almost all countries. Especially many Eastern European countries and Norway continued to improve sales and profitability was supported by good demand. However, in Sweden, sales were negatively affected by the ending of large projects and delays in new projects. We are constantly following the market conditions in all countries in order to adapt to changes in demand. In order to secure the profitability going forward, in Sweden, we are optimising the fleet mix within the regions and improving our sales efficiency. In Finland and Germany, we are currently executing transformation programmes, including various operative performance improvement actions. Positive results are expected to be seen gradually from Q2 19 onwards.

In the Modular Space division, total rental sales improved by 49.8% in local currencies, driven mainly by the Nordic Modular Group (NMG) acquisition completed during the last quarter of 2018. The integration is proceeding according to plan and positive impact is already visible in terms of market position and business model expansion. Also, organic rental sales increased by 12.0%, where all countries contributed to growth. Comparable EBITA improved by 45.3%, supported by the NMG acquisition, positive development in rental sales and other operative measures.

The rental market outlook varies between the countries, with slowing growth in Sweden, and a stable market in Finland, Norway, Germany and Austria. In the Eastern European countries, including the Czech Republic and Slovakia, favourable market conditions are expected to continue. The outlook for the Modular Space market remains strong.

Cramo’s purpose is to drive the sharing economy. We believe digitalisation is one of the most important enablers of more efficient and accessible sharing. On 18 February, we launched a new digital solution for smarter rental including an easy-to-access web portal and two mobile apps, which make it easier for our customers to rent and manage their equipment digitally and manage returns of equipment. In order to offer the easiest possible access to shared resources, we will continue to invest in digitalisation also in the future. 

MARKET OUTLOOK

The European Rental Association (ERA) forecasts that the equipment rental market will grow in 2019 in all Cramo’s operating countries within the scope of ERA’s forecast, varying approximately between 4 to 6%. Forecon estimates that the equipment rental market will grow in 2019 by 3% in Finland, 1% in Sweden, 2% in Estonia and 6% in Lithuania.

In equipment rental, changes in demand usually follow the construction market with a delay. The construction market outlook for the year 2019 includes large country-specific differences. According to Euroconstruct November 2018 estimates, the construction market will decrease by 3.8% in Sweden and by 1.2% in Finland mainly due to a decline in residential construction. In Norway, the construction market is expected to grow by a solid 4%. In Germany and Austria, growth is forecasted to be 0.1–1.5%. Growth is rapid in the Czech Republic, Slovakia, Hungary and Poland, where Euroconstruct estimates on average 9.1% market growth. Forecon’s construction market growth estimate for Lithuania and Russia is approximately 2–4%, whereas in Estonia the market is forecasted to decline slightly by 1%. The Sveriges Byggindustrier kept their latest March 2018 construction market outlook unchanged, indicating that the Swedish construction market will decline by 3% in 2019. The Confederation of Finnish Construction Industries forecasted in April 2019 that the peak in the construction market has reached and a slight decrease is projected thereafter.

CRAMO’S FINANCIAL REPORTING IN 2019

In 2019, Cramo will publish its Half Year Financial Report and Q3 Business Review as follows:

• 15 August 2019: Half Year Financial Report for January-June 2019
• 31 October 2019: Business Review for January-September 2019

CONFERENCE CALL

A conference call for analysts, investors and press will be held on 2nd May at 12.00 pm (EET). To participate in the conference call please dial in 5-10 minutes prior to the start time on

• +358 981 710 523 (FI)
• +46 856 642 692 (SE)
• +44 333 300 9269 (UK)
• +1 844 625 1570 (US)

The conference call will be held in English. Questions can be asked after the presentation.

A replay of the conference call will be available later on the same day at www.cramogroup.com.

CRAMO PLC

Leif Gustafsson
President and CEO

Further information:
Mr Aku Rumpunen, CFO, tel: +358 40 556 3546, email: aku.rumpunen@cramo.com

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

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 about 300 depots in 14 countries. With a group staff around 2,700, Cramo's consolidated sales in 2018 was EUR 780 million. Cramo shares are listed on Nasdaq Helsinki Ltd.

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

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• Cramo_Q1_Business_Review_2019