Cramo’s Equipment Rental division provides trouble-free renting services from fleet management at construction sites to machinery, on-site services and smart concepts for optimising work processes. The construction industry is slowly starting to re-shape its business models, and all our markets show signs of the industry shifting its focus from purchasing to a sharing economy. At Cramo, we share not just our equipment with our customers, but also our expertise on optimised, safe and sustainable equipment usage. Our digital solutions are shaped to meet market-specific demands.
Equipment and solutions
A modern, comprehensive fleet of construction equipment, such as machines, tools and site huts for any type of assignments, from major road projects to small-scale and industrial projects.
Logistics and on-site services
Rental-related services ranging from transport, delivery, maintenance and on-site service to solutions for dust and humidity control, heating, temporary electricity and weather sheltering.
Management and planning
Trouble-free renting services, such as fleet management and proactive site monitoring, recommendations for alternative methods and equipment or capacity needs, user and safety instructions, and advice on applicable health, safety and environment (HSE) regulations and standards.
Smart concepts for optimising work processes, such as clean house, dry construction, smart energy and security.
In 2018, the demand for equipment rental developed favourably. Our sales grew throughout the year and demand was positive in most markets, accelerating more rapidly in some smaller market areas. Profitability improved in Scandinavia, Central and Eastern Europe.
In Sweden due to regional market differences resources were shifted more into high demand areas and customer segments during 2018. Sales grew by 5% in local currencies and profitability remained on a good level.
In Finland, profitability was weighed down by increased direct costs due to high capacity utilisation and fierce competition, which affected prices. Actions to improve profitability in Finland were launched during the summer. These actions include cost base reductions and more strict pricing process.
In Germany, sales were positively affected by the acquisition of a German construction site logistics company, KBS Infra GmbH, which supported segment profit and profitability during 2018. However, the underlying performance of Germany has not reached our targets and improvement actions continue in order to increase the profitability of the business
Sales by customer group, MEUR
Sales and comparable EBIT, MEUR
Comparable return on capital employed, %
Long-term targets 2017-2020 and outcome 2018
Organic sales growth¹
1 Organic sales growth excludes the impact of acquisitions, divestments and exchange rate changes
2 According to ERA, in the markets where Cramo is present
3 Cramo changed the calculation method of ROCE’s capital employed component into 12 months average in 2018 reporting period
Stable market growth continues
The estimated rental market size in the countries where the Equipment Rental division operates totalled about EUR 8.8 billion in 2017. Based on market studies the market is expected to grow annually by about 4% during 2017–2020.
|Market overview and our position|
|Market size estimate 2018, BEUR1||Market position estimate 20181||Market CAGR 2017 – 2023, %1|
|Central Europe2||5.0||#4, #24||3.8|
|Eastern Europe3||0.8||#1, #35||5.6|
1 Management estimate based on ERA European Rental Industry 2018 Market Report and Forecon estimates, January 2019
KBS Infra acquisition expands service offering in Central Europe
In January 2018, we announced the acquisition of a high-quality construction site logistics company in Germany, KBS Infra GmbH. KBS Infra’s service offering is built around extensive construction site planning and logistics provided by 180 experts. The KBS Infra acquisition bolstered our German operations with a fleet of some 6,000 containers, an extensive range of on-site electricity equipment and other equipment related to construction site usage.
In Central Europe, the supply chain resulting from the addition of KBS Infra gives a whole new perspective to serving mid-sized customers that need solutions ranging from installing construction site fencing to finalising their project. We see significant cross-selling potential with our current equipment rental offering since we will be able to gain access to construction sites early on. Furthermore, we can now offer our customers on-site electricity and site logistics services. Site huts are now available to our customers throughout Germany.
With Cramo, we complete each others product and service portfolios. What we bring to the merger in particular is KBS Infra\'s capability to identify customer needs for different equipment up front, says KBS Infra GmbH\'s Managing Director, Stefan Diegisser. In partnership with Cramo, we can build customised offers that include not just equipment and site hut delivery, but also technical advisory and enhanced services.
We see logistics services in city centres as a particular growth area. Alongside the increase in the worlds population, city centres show a disproportionate increase in population density. This inevitably leads to continuous new construction and renovation of existing buildings. Logistics solutions for construction projects in city centres are extremely complicated and require expert planning and execution.
Together, Cramo and KBS Infra can easily supply these services, nation-wide and on-site to both mid-sized and large construction companies. With our German customers only beginning to become familiar with digital tools, we are extending our services to offer proactive on-site advisory and customer service.
KBS Infra contributed positively to the Central Europe segment’s profit and profitability.
Global sharing economy trend boosts demand for rental
We offer fleet management tools that help customers save on costs while optimising the availability of appropriate machinery and services right when they are needed. In general, demand for rental equipment is affected by construction and renovation volumes in each market. We were able to capture this volume potential in many of our markets. In Finland, we were able to capture volume potential, but capturing revenue potential lagged behind due to tougher competition.
During the year, we continued to develop methods for improving capacity utilisation. By optimising equipment usage, more customers can be served, and the carbon footprint produced by each piece of equipment manufactured can be reduced to the greatest extent possible.
In 2018, we developed a maintenance break cycle management tool to better capture market potential for our industrial customers. The tool has been used particularly in Finland, where we have focused on customers’ maintenance break schedules. This has allowed us to place customers in groups with maintenance breaks lined up one after another. Using the tool, we move equipment needed for maintenance efficiently from one customer to the next.
Our maintenance break cycle management tool allows us to optimise equipment utilisation and serve more customers. We also get satisfied customers since they obtain all the equipment they need right when they have scheduled their maintenance break. This also reduces their need to store the tools prior to or after their usage.
One particular business growth driver – the demand for total solutions and service concepts – offers greater sales prospects, especially in Scandinavia and Central Europe. There, our traditional customers groups – large companies – still have in-house production of services, while mid-sized companies look to partnerships for equipment rental solutions and service concepts. Going forward, we will start offering mid-sized businesses in Scandinavia and Central Europe logistics and on-site services, management and planning services as well as smart concepts. Our acquisition of KBS Infra in Germany presents additional opportunities to serve this customer group.
In Finland, the market is shaped differently. Large companies have outsourced their on-site services, fleet planning and smart concepts and have relied on our rental-related services for years. One example of a large project where Cramo supplied most of the contractors with rental equipment was the bioproduct mill built in Äänekoski, Finland, completed in 2017. A similar project in Sweden was the Östrand pulp mill in Timrå, completed in 2018, where we supplied a wide range of on-site services for all contractors on the construction site.
Megatrends provide impetus for our game-changing offerings
We have set ourselves a challenging target of responding to market megatrends by supplying game-changing offerings in the area of responsible sharing of resources. Each of our markets has made positive moves towards this target. In Finland and Sweden, we have worked on providing game-changing offerings and looked at our delivery platform. In Central Europe, we are moving to a whole new level through our acquisition of the German-based KBS Infra GmbH. In Norway, we have focused on sales and supported this change through re-organisations and by starting to work with newer solutions such as building information modelling (BIM).
BIM was first launched as a service in Norway in 2018 and will be available to customers in other markets in the year ahead. BIM is a well-established 3D model-based method for the design, construction and maintenance of buildings and infrastructure in the construction industry. This method supports the value chain in planning, visualising, monitoring and optimising the work of all stakeholders in the construction process as well as their need for equipment, tools and other solutions offered by Cramo. We want to give our customers trouble-free services, and simplifying our customers’ work flow can benefit both us and them so that we truly become an integral part of their construction projects. Take a look at what Cramo’s service process could look like for customers using BIM in practice here.
Dry chain control is of special importance to the construction industry in Finland. Rising to the challenge, we have created game-changing offers to help construction companies meet dry chain requirements in all phases of construction. A prime example is our full-service dry chain concept, where we put together a number of services that already existed and added some new ones, such as wireless measurement devices for measuring humidity.
With our help, builders can keep structures and materials dry and measure humidity levels in real time. Our offering was launched at the beginning of the year, and we are very proud of it. More and more construction companies are committing to the new Dry Chain 10 model designed especially for the construction industry. Some large companies have announced that all future projects will be dry chain projects. Cramo Finland finalised its first dry chain rental service projects in 2018.
Working from inside out in digitalisation
Cramo has 301 equipment rental depots. At each depot, there are normally peak times between 7–9 a.m. and 2–4 p.m., when rental equipment is either delivered to the customer or returned. Customers are already supported by 24/7 service on our digital platform, but at the depots, Cramo’s experts have traditionally spent a lot of time calling each other during these peak hours and checking the availability of rental items.
In 2018, we took a crucial step forward in enabling real-time data availability and facilitating communication between depots. All depots have adopted digital purchasing and logistics platforms. Cramo has clearly moved from talking, planning and implementing to using digital platforms on an everyday basis to share equipment rental information between depots. As a result, we have improved our equipment utilisation rate and people interaction.
To ensure up-to-date information in the platforms, we established country-wide machinery coordination for our business in Sweden in 2018. Our Swedish employees now consult the platforms instead of making an average of three phone calls to see what rental machines and tools are available and where. In Sweden alone, several thousand minutes a month were saved in phone calls between depots. These minutes have been converted into time used to support customers in their construction processes.
The single most important driver that got employees to start using these digital solutions was their seeing that the new technology actually works. By establishing country-wide machinery coordination, we could be sure the data in the digital platform was up-to-date at all times. This was crucial in teaching employees to trust the digital solution and making them want to use it on a daily basis.
The construction industry and the public sector still use conventional methods in many aspects of planning and advancing their construction and renovation projects. As they take big steps and small towards smarter methods and digitalisation, we are at the forefront in supporting them every step of the way. For us, digitalisation is also a tool to brand ourselves and differentiate us from the competition.
In Germany, we have been considered as a trading and rental company for historical reasons. In the years ahead, we will focus on marketing and branding to position Cramo as a rental company that offers a full-service approach, delivering products and services, from installing fencing to renting tools. We have started training our managers and depot experts to use digital platforms in their daily work. The next stage will be to help our customers use our digital platforms, such as digital renting, fleet management and drop-off services.
Meanwhile, we are focused on standardising our service and quality at the depots and at the same time expanding sales. While our big customers want a reliable supplier that provides materials on demand, our mid-sized customers – who need help on construction sites from start to finish, from installation of fencing around the site to completion of the building – offer potential. Our proactive approach combined with our digital tools offers us an opportunity to capture new market potential in the mid-sized customer group.