Wait and see: IRN reports on the results of the ERA/IRN RentalTracker survey for Q1 2012

The ERA/IRN RentalTracker for the first quarter of 2012 reveals that Europe's rental sector remains cautious in the face of wider economic uncertainty. Murray Pollok reports.

Given the lack of a resolution to the Eurozone debt crisis it was always likely that the RentalTracker results for Q1 2012 would have a provisional, ‘wait and see' quality.

And so it proves. Overall confidence at the end of March was marginally better than at the end of 2011 (see Chart 1), with a slight improvement in the proportion of respondents seeing improving business conditions and a fall in the numbers reporting deterioration.

We should point out, however, that the past two surveys have included data from Russian (courtesy of a joint venture with Moscow-based consultant Rus Rental), which is one of Europe's most optimistic rental markets just now. Without the impact of the Russian respondents - more than 30 companies - the overall results for the last two quarters would have revealed a slightly worse picture than we present here.

The continued uncertainty over Europe's wider economy - and in particular the sharp deterioration in confidence levels in Italy - are reflected in a slight weakening in employment intentions, with a fall from 35% to 25.2% in the number of companies anticipating adding to their workforce in the second quarter of the year.

The proportion planning to make no changes to their staffing levels has now reached almost 63% - the highest figure since we started asking about employment intentions in early 2010.

With regard to fleet investment, the proportion expecting to increase spending by more than 10% this year has actually increased by 4% to 35%. That means that just over a third of all rental companies expect to increase spending significantly this year - a respectable number, but not high in the context of the last four years. It is clear that rental companies remain cautious about increasing their fleet CapEx.

There has also been a slight deterioration in the fleet utilisation trend - the proportion reporting increases in fleet usage has fallen from 43.9% at the end of 2011 to just under 40%. Still, that's still a healthy proportion seeing improvements, and the proportion seeing utilisation levels fall remains at a low level - around 20% - which is encouraging. In general utilisation levels are either increasing or staying level.

In terms of quarterly activity comparisons, the year-on-year trend for revenues to increase is clearly weakening. Almost 40% of respondents said activity levels in the first quarter were higher than the same quarter a year ago - that's a healthy level, but significantly lower than the plus 55% levels seen in the previous six quarters. This clearly reflects the fact that last year saw significant rises in revenues compared to late 2009 and 2010, which makes year-on-year comparisons more difficult.

In regional terms, Europe isn't so much twin-track as triple-track, with Russia adding a positive Eastern element to the continuing North-South divide. The North-South variability in confidence remains pronounced: Spain shows absolutely no sign of improving and Italy has deteriorated for another quarter; in contract, Nordic and multinational companies (which are mainly in northern Europe) are the best performers.

Russia seems to be the fastest growing rental market in Europe at the moment. It is the most optimistic market in terms of predictions of business levels 12 months from now, and is in the top two or three in every measure of business conditions - improving utilisation, investment levels and employment intentions.

It is also worth noting that multi-national companies remain quite positive. They saw the biggest positive jump in business opinion from the end of 2011 and they are in the top half of the tables for investment plans and employment growth.

Alongside the multinationals it is companies in the Nordic region and Germany who are faring the best. In the case of Germany its modest position in the various tables - such as quarterly year-on-year growth and current business sentiment - has to be seen in the context of a much more positive market situation a year ago than many other countries in Europe.

In the other major rental markets, confidence levels in France seem largely unchanged, or a little better, although there has been a rapid fall over the past three months in the proportion seeing increases in fleet utilisation. The UK/Ireland saw a modest worsening in conditions, reflected in lower investment plans, lower employment intentions, a smaller percentage reporting increasing utilisation, and a smaller positive balance of opinion on current conditions at the end of the first quarter, although still positive at +18%.

Likewise in the Benelux region, where sentiment continued to weaken. Around 20% more people in the Benelux reported worsening conditions than reported improvement.

So Europe's rental markets remain in ‘holding pattern'. Capital investment plans are cautious - one major supplier told IRN at Intermat that it currently had one month visibility on European order levels - and sentiment on current business conditions has stabilised at levels considerably lower than in the first half of 2011.

‘Optimism' chart

Percentage forecasting business
to be ‘much better' 12 months ahead
Russia 47% (40%)
Nordic Region 40% (29%)
Multinationals 20% (23%)
All Europe 14% (17%)
Benelux 14% (2%)
UK/Ireland 12% (24%)
France 7% (14%)
Italy 6% (9%)
Germany 0% (15%)
Spain 0% (6%)

Change in balance of opinion
from previous quarter

Multinationals +52%
France +19%
Russia +12%
Benelux +10%
All Europe +6%%
UK/Ireland -10%
Italy -19%
Nordic Region -20%
Spain -27%
Germany -49%

Regional Trends

Balance of opinion on
business conditions (end Q1, 2012)
(previous quarter in brackets)
Nordic Region +47% (+67%)
Multinationals +40% (-12%)
UK/Ireland +18% (+28%)
Russia +17% (+5%)
France +14% (-5%)
Germany +13% (+62%)
All Europe +7% (+1%)
Benelux -21% (-31%)
Italy -59% (-40%)
Spain -60% (-33%)

Note: Balance of opinion = proportion seeing improvement - proportion seeing worsening conditions.

Percentage reporting
Q1 2012 growth vs Q1 2011
(previous quarter in brackets)
Nordic Region 80% (95%)
Russia 67% (62%)
France 50% (77%)
UK/Ireland 48% (64%)
Multinationals 47% (73%)
All Europe 38% (58%)
Benelux 30% (46%)
Germany 25% (77%)
Italy 6% (28%)
Spain 0% (34%)

Percentage who will employ more in Q2 2012
(previous quarter in brackets)
Russia 76% (62%)
Germany 55% (54%)
Nordic Region 50% (47%)
Multinationals 40% (35%)
France 38% (30%)
UK/Ireland 27% (40%)
All Europe 25% (35%)
Spain 14% (6%)
Benelux 10% (26%)
Italy 7% (12%)

Percentage with increasing utilisation in Q1 2012
(previous quarter in brackets)
Nordic Region 71% (68%)
Germany 60% (67%)
Russia 66% (58%)
Multinationals 50% (39%)
UK/Ireland 40% (48%)
All Europe 40% (44%)
Benelux 25% (39%)
France 18% (68%)
Italy 8% (15%)
Spain 0% (14%)

Percentage expecting >10% investment
in 2012 compared to 2011
(previous quarter in brackets)
Russia 62% (43%)
France 58% (12%)
Nordic Region 54% (50%)
Germany 54% (45%)
Multinationals 40% (27%)
All Europe 35% (31%)
Benelux 30% (29%)
UK/Ireland 27% (45%)
Italy 0% (18%)
Spain 0% (0%)

Percentage expecting >10% investment
in 2013 compared to this year
Nordic Region 77%
Russia 63%
Multinationals 50%
France 42%
All Europe 38%
UK/Ireland 36%
Italy 33%
Germany 27%
Spain 0%

The survey

In total approximately 200 companies in Europe responded to the ERA/IRN RentalTracker survey for the first quarter of 2011. The survey was carried out at the end of March and beginning of April.

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

- Assodimi (Italy)
- ConfalQ (Spain)
- Construction Plant-hire Association (CPA) (UK)
- Consurent (Netherlands)
- DLR (France)
- RusRental (Russia)

The RentalTracker for Europe is a joint venture between IRN magazine and the European Rental Association (ERA). If you have suggestions about how the survey could be improved, then please contact the ERA on [email protected] or Murray Pollok, IRN Editor, at [email protected]