Cramo expects 'challenging' first quarter

Cramo's final quarter of 2009 saw little recovery in its markets - sales were down 19.5% to €115.4 million - and one-off impairment charges of almost €22 million in the final quarter contributed to a €39 million overall loss for the company in 2009. It anticipates a "challenging" first quarter of 2010.

Sales were down in all markets, but Cramo said that EBITA (earnings before interest tax and amortisation) were positive in Sweden, Finland and Norway for the year, while in Denmark and Central and Eastern Europe, profitability continued to be unsatisfactory.

Cramo Group's sales for the full year were €446.7, down 23.0% on 2008. In local currencies, sales fell by 18.5%.

The company is not expecting any major recovery in its markets in 2010. It said that market sentiment had stabilised in the final half of 2009 and there were certain signs of recovery in construction markets. However, "demand for equipment rental services may continue to decrease in several markets in the first half of 2010.

"In the beginning of the year, extraordinary winter conditions also slowed down construction starts in Central and Eastern Europe in particular. Cramo expects the first quarter in 2010 to be challenging."

The company will benefit in 2010 from its restructuring efforts that will reduce costs by €50 million compared to 2008, with €35 million of that reduction achieved in 2009.

"Cramo's main objectives in 2009 were to achieve a positive cash flow after investments, a decreasing gearing and the best possible profitability in a weakening market. These objectives were successfully achieved", said the company. Gearing at the end of the year was 113.4%, down from 149.3%.

Cramo will continue to maintain low levels of gross capital expenditure in 2010. Gross CapEx in 2009 was €31.5 (down from over €200 million in 2008) and it will be in the range of €30 to €40 million this year.