Extract from the Stock Exchange Release published on 15 August 2019:
Cramo’s second quarter was both successful and challenging. Cramo’s partial demerger was successfully completed on 30 June 2019 and the trading in Adapteo’s shares in the Main Market of Nasdaq Stockholm commenced on 1 July 2019. This was a historic milestone for Cramo; building the Modular Space business from the beginning to become a listed company. A new chapter for Cramo has started, with full commitment and enthusiasm, we will continue to develop Cramo into its full potential in the equipment rental industry. Cramo has a strong position in Europe, where we see interesting growth opportunities as well as good possibilities to develop our existing business.
Cramo’s second quarter performance in 2019 (for Cramo’s continuing operations, excluding Cramo’s former Modular Space division) fell below expectations with comparable EBITA being clearly lower compared to the second quarter of 2018. Due to low profitability in the second quarter, Cramo also estimated (profit warning release on 11 July 2019) its comparable EBITA for the full year 2019 to decrease from 2018. Despite the lower profitability, cash flow after investments for continuing operations is expected to be significantly higher in 2019 compared to 2018.
Sales in the second quarter for Cramo’s continuing operations were slightly lower compared to last year in comparable currencies. Sales development in the second quarter was modest in Sweden due to a decrease in and the timing of larger industrial projects. Additionally, quarterly sales in Sweden were negatively affected by the fact that there were two fewer business days during the second quarter compared to last year. Except for the larger industrial projects, the operational performance in Cramo’s business in Sweden remained stable at the 2018 level. In Norway, sales development was positive, driven by good demand and increased utilisation rates. In Finland, performance didn’t return to the expected level during the second quarter. In Central Europe, sales were higher compared to last year driven by industrial projects. Expansion investments and sales growth in KBS Infra are proceeding according to plans.
In order to right-size the Group’s cost structure upon demerger of Adapteo and to ensure the Group’s profitability going forward, various performance improvement actions are being initiated and carried out. These include Group structure optimisation, specific sales efforts, cost reductions as well as capital efficiency measures in all countries. The targeted run-rate savings of EUR 10-12 million from above measures will be shown gradually from the fourth quarter of 2019, and in full effect for 2020.The estimated restructuring costs amount to EUR 3-5 million and are fully recognised during the second half of 2019.
To capture the full potential of the focused equipment rental business, we will continue to work with the cost structure, invest in growth to increase our market share and optimise our profitability and cash generation. The new strategy is now finalised to ensure Cramo’s competitiveness in the long term. More information about the new strategy, group-wide performance enhancement program and the new financial targets will be presented during our Capital Markets Day on 12 September 2019.