Cramo Group’s business development is based in part on corporate acquisitions. Risks associated with acquisitions may involve, for example, knowledge of local markets, customers, key personnel and suppliers. The aim is to take related risks into account through careful advance arrangements and the systematic monitoring of corporate acquisitions.
Risk management measures are aimed at securing Cramo Group’s long-term competitiveness. The Board of Directors and management are responsible for managing business, financial and environmental risks as well as the related insurance coverage.
Management of business risks
Cramo Group’s business largely depends on the construction and property markets, which are characterised by seasonal fluctuations. On the other hand, the Group is not dependent on individual customers or projects, since its extensive customer base is spread across a number of market areas. Furthermore, the continuous management and optimising of utilisation rates of the Company’s equipment fleet is a critical success factor.
The Group management team and the Board of Directors analyse the financial performance of the Group and its business units on a monthly basis. Cramo’s business risks are mitigated by the Group’s number of depots and offices spread among fourteen countries.
Management of financial risks
In addition to cash flow financing, the Group raises bank loans and concludes equipment lease agreements in financing its operations. Its main financial risks relate to interest rate risks associated with cash flows, currency risks, credit risks and liquidity risks. To manage its interest rate risks, Group borrowings and investments are spread across fixed and floating interest rate instruments. In an effort to manage its interest rate risks, the Group can make use of derivative contracts, such as interest rate swaps. Currency risks mainly involve net investments in foreign units and foreign currency-denominated loans, with currency forward contracts used as hedging instruments. Since Group companies mainly carry out their sales and purchases in the unit’s functional currency, the Group is not exposed to any major foreign exchange risks associated with these transactions.
The Group Treasury identifies, analyses and manages financial risks in cooperation with Group companies.
Management of environmental risks
Cramo Group’s environmentally sound corporate mission entails high utilisation rates of professionally serviced equipment and minimisation of the environmental impact caused by the use of equipment and energy – aspects that the Group pays special attention to in purchasing its rental machinery and equipment.
Cramo Group’s quality and environmental management systems are based on the ISO 9001 quality management certificate and the ISO 14001 environmental management certificate granted by Det Norske Veritas, which covers the Company’s operations in Finland, Sweden, Norway and Denmark. In addition, Cramo’s health and safety management system in Finland and Sweden are based on the OHSAS 18001 health and safety management certificate.
Extensive insurance coverage forms an integral part of Cramo Group’s risk management. The Group’s management continuously assesses the adequacy and scope of insurance coverage, in view of the extent and nature of Group operations.