Caution creeps in to second quarter ERA/IRN RentalTracker survey

Encouraging signs for the industry continued in the results of the second quarter ERA/IRN RentalTracker survey, albeit with a little more caution in some areas.

Nevertheless, the survey should bring further comfort to the European rental industry – the positive signs for the UK and Germany continue, for instance, making these the two most confident and optimistic markets in Europe at the moment.

In the UK, the balance of opinion on current conditions (the difference between the proportions of respondents reporting improvements and those reporting deteriorating conditions) stood at a healthy +69%, albeit down against a balance of +79% compared to the first quarter.

In Germany the figure was +58%; a marked increase from a balance of +27% at the end of the first quarter.

Signs are also good for capital expenditure in the UK for 2014, with 69% of respondents for this region expecting to increase the level of investment in their fleets this year compared to last year. This is an increase from 57% of UK respondents to the first quarter survey.

However, a slightly more conservative 27% of German respondents said they expected to increase investment in their fleets this year, down from 40% in the first quarter.

The Benelux region, meanwhile, revealed some more positive responses in the second quarter, compared to the first quarter ERA/IRN RentalTracker survey.

The balance of opinion on current conditions stood at +46%, up from +20% at the end of the first quarter, while the number of respondents forecasting improved business conditions for the next 12 months stood at 100%, an encouraging improvement compared to 70% in the first quarter.

However, a mixed picture emerged from the Nordic region, where a balance of 39% of respondents said business conditions were currently improving (compared to +27% at the end of the first quarter).

Nevertheless, 31% of respondents from the Nordic region reported year-on-year growth in the second quarter, compared to 45% in the first quarter. But as far as fleet utilisation and investment intentions were concerned, Nordic respondents reported the same levels as in the first quarter, with half still reporting increasing time utilisation in the second quarter, and half still expecting to increase fleet investment by more than 10% in 2014.

Cautious multinationals

However, there were signs that multinationals are a bit more cautious than three months ago. Indeed, 40% of those companies with businesses in more than one country reported seeing second quarter growth, compared to the same quarter last year. This was down from 65% of respondents reporting year-on-year growth in the first quarter survey.

This increased caution was also reflected in multinationals’ investment plans, with 20% of respondents now expecting to increase year-on-year capital expenditure on their fleets in 2014, compared to 53% in the first quarter.

Importantly, the balance of opinion for multinationals shifted significantly down to +7% for the second quarter, compared to a very positive +50% in the first quarter.

Meanwhile, French companies were still rather downbeat and not particularly optimistic for the future – in fact just 21% of respondents said they expected to see business conditions improving in 12 months’ time.

And the current mood in Spain and Italy also continued to be dampened – in Italy, for instance, the balance of opinion on business conditions at the end of the second quarter stood at -13%, reflecting the fact that respondents felt that conditions were deteriorating.

In Spain the balance of opinion was 0%, which is nevertheless an improvement on the -13% reported at the end of the first quarter.

Spain and Italy were also more optimistic about the future than France. In Spain, 38% of respondents to the second quarter ERA/IRN RentalTracker forecast improving business conditions in 12 months’ time, for instance.

Meanwhile, 43% of Italian respondents forecast improvements.

European trends

Looking at the second quarter trends in Europe as a whole also revealed positive sentiment. The balance of opinion of respondents reporting improving business conditions at the end of the second quarter stood at 33%, up from 19% at the end of the first quarter.

Compared to a year ago, a balance of +26% of all respondents said quarterly activity had improved, up from a balance of +21% in the first quarter of 2014. The time utilisation trend was also positive, with 38% of respondents feeling that fleet time utilisation was increasing, up from 36% in the first quarter. The balance of opinion on this measure was +24.5%, up from +18.4% at the end of the first three months of the year.

However, this positivity was tempered somewhat by a more cautious outlook, with 54% of respondents expecting improving conditions a year from the end of the second quarter, compared to 56% in the first quarter.

In addition, 37% of all respondents to the second quarter ERA/IRN RentalTracker said they expected to increase the number of staff they employed in the next quarter, almost exactly the same as the 36% of respondents forecasting increases at the end of the first quarter.

However, while the fact that employment intentions have been this firm for two quarters in a row can only be a positive sign for the industry, the number of respondents expecting to reduce the number of staff they employ did increase to 15.2%, compared to 8.3% at the end of the first quarter.

The survey was conducted in the final three weeks of June, and generated around 120 responses. This was a relatively low response when compared to previous surveys, and reflected a fewer response from companies in Russia and more generally the onset of the European holiday season.

The RentalTracker for Europe is a joint venture between IRN magazine and the European Rental Association (ERA)

Our thanks to all the companies who participated and to the following organisations which helped distribute the European survey to their members and contacts:

- Assodimi (Italy)

- ConfalQ (Spain)

- Construction Plant-hire Association (CPA) (UK)

- DLR (France)

- Hire Association Europe (HAE) (UK)

- RusRental (Russia)

- Norwegian Rental Association

- Danish Rental Association

- The Association of Finnish Technical Traders

- Verhurend Nederland (Netherlands Rental Association)

The full report on the results, with extra graphs and tables, will be published in the July-August issue of International Rental News.

If you have suggestions about how the survey could be improved, then please contact the ERA on [email protected] or Helen Wright, IRN Editor, at [email protected]