International strategy working says GAM as 2009 sales fall 25%

Spanish rental company GAM reported a 25% fall in revenues to €277.8 million for the full year 2009 and it made a net loss of €8.9 million. EBITDA (profit before interest, tax, depreciation and amortisation) was €83.4 million.

The company said the decline was stable in the final half of the year and that it expected to generate higher rental prices and fleet utilisation this year because of the reduced size of its fleet in Spain.

The relocation of machinery from the domestic market to the international subsidiaries has improved the utilization rate and will allow the company to increase its prices and improve margins, consolidating even further the leadership of GAM in the equipment rental industry.

The company said its geographical and market diversification strategy was working, with 30.8% of its business now generated from on-construction or international businesses. It said its international revenues grew by 27.7% in the year while revenues from new markets in Spain were up by 7.5%.

The company has recently established rental operations in Mexico, Brazil, Panama and Peru and said it aims to be "the leading rental company in Latin America."

In addition to the Latin American business GAM also rents equipment in Saudi Arabia, Poland, Romania and Bulgaria. In Spain it has special divisions focused on utilities/power, wind power, events and railways. These divisions currently operate only in Spain but GAM said they would soon be started in other markets as well.

The company still has significant levels of debt - €543.4 million at the end of 2009 compared to €611.0 million at the end of 2008. Around 70% of this is associated with financing of its equipment fleet. The company reduced its net debts by €68 million during the year and debt is expected to come down to around €500 million by the end of March following a new €40 million rights issue.

Annual costs fell by 12% compared to 2008, with average monthly recurring costs of €18.2 million down to an average of €15.2 million in the final quarter of 2009. Average costs in the final quarter compared to 2008 were down 16.4%.