The Modular Space business division, Cramo Adapteo, encompasses the company’s premium modular space rental and rental-related service operations. Our solutions are high quality, flexible, cost-effective and energy-efficient, and they deliver a user experience comparable to that with permanent buildings. They are especially designed to meet the demanding needs and requirements that apply to buildings for schools, daycares, offices and accommodation, but are also used for events, exhibitions, shops and other application areas. We operate in the Nordic countries, Estonia, Lithuania and Germany.
We serve both the public and private sector and deliver comprehensive modular space solutions as turn-key projects for rental periods varying from two to five years, often even longer. Projects typically include needs analysis, design, planning, assembly, maintenance and other services during the rental period as well as disassembly when the project reaches its end. With the acquisition of Nordic Modular Group Holding AB, we are now also able to offer customised modular buildings for long-term rental needs, meaning rental periods of five years or more, and permanent modular buildings for sale.
In-house R&D for continuous development of customer-centred solutions.
Manufacturing of modules for renting and for sale partly in our own production units.
Analysing customer needs and designing the optimal solution together.
Transport of modules and assembly of temporary space solutions rented or bought by the customer.
Solutions for short-term and long-term rental periods, maintenance and other services available during renting.
Disassembly of the temporary space solution, site restoration and off-site transport.
During the year, strategic alternatives were assessed for the Modular Space business. Based on the outcome of the assessment, the Board of Directors of Cramo has decided to pursue a spin-off of the company’s Modular Space business to Cramo’s existing shareholders. The transaction and separate listing are expected to take place latest in the third quarter of 2019.
Performance improvement actions produced strong results
The demand for flexible modular space solutions was good in all of the division’s countries during the year and was particularly strong in Sweden, Denmark and Finland. Strong market growth continued in the public sector, especially in the school and daycare customer segments.
The Modular Space division posted a positive performance in 2018 both in terms of sales and profitability. A good level of project deliveries and improved fleet utilisation supported the increase in rental sales.
Our profitability was enhanced with the support of every country, including Germany and Finland, which developed favourably during the year thanks to the hard work done to make the uplift happen. Increased profitability was mainly due to higher fleet utilisation rates and increased rental sales as well as to performance improvement actions carried out in 2017 and 2018. These actions included optimising our organisation structure, securing the right competences and resources, improving project deliveries and fleet utilisation, intensifying and focusing sales activities and developing our pricing. The objective is to ensure that we utilise our full potential and thus safeguard our long-term competitiveness, growth and profitability. All in all, we are in a good position to aim higher in everything we do and become a leading player in the Northern European modular space industry.
Sales by customer group, MEUR
Sales and EBIT, MEUR
Return on capital employed, %
Long-term targets 2017 – 2020 and outcome 2018
Organic rental sales growth¹
1 Organic rental sales growth excludes the impact of acquisitions, divestments and exchange rates
2 Cramo changed the calculation method of ROCE’s capital employed component into 12 months average in 2018 reporting period
Value-adding acquisition opens up new business and growth opportunities
In October, we strengthened our position in the Nordic modular space market by acquiring Swedish-based Nordic Modular Group Holding AB. The acquisition supports us in expanding our business model to include the in-house development and manufacturing of modular solutions. This will enable us to enter the long-term rental business and offer modular buildings through a sales business model, and thus reach new customer segments and channels to the market. Our new business model also creates a platform for further international expansion in the attractive Central European markets.
The acquisition helps us reach our strategic growth and business targets in several ways:
- Strengthen our modular space market position in the Nordic countries with adequate size and cost-effectiveness propelled by significant synergies
- Form a versatile modular space group with in-house R&D, design and manufacturing to expand the temporary and permanent sales business
- Penetrate the short-term/long-term rental business with optimised and differentiated solutions for targeted customer segments
- Establish a strong platform with capacity to grow the rental and sales business in Central Europe, both organically and through acquisitions
- Increase awareness of the modular space concept and business transparency, driving long-term value creation – becoming a true shaper of the industry
The NMG acquisition strengthens our position in the Nordic modular space market and is an important step in our strategy to expand our business model into long-term rental and sales of relocatable building solutions. In-house R&D, design and manufacturing capabilities further strengthen our competitiveness in these endeavours.
Philip Isell Lind af Hageby
Executive Vice President, Modular Space
We continuously devote significant efforts to understanding and analysing the real needs of our current and potential customers and the end users of modular solutions. Deeper insight into customer and end user needs, for example, regarding quality, functionality, services, energy efficiency and the indoor climate, will enable us to develop the most value-adding, sustainable and competitive solutions. Now, with our in-house research and development and manufacturing functions, we can meet the needs of our different customers even more precisely.
As with a majority of our customers, sustainability is important to us, and we continuously enhance our solutions and processes in that respect. We work proactively to comply with the latest environmental regulations and to drive development beyond that. By doing so, we also help customers achieve their sustainability targets. Our energy-efficient solutions are designed for demanding Nordic weather conditions. We have chosen to use wood as the main material in most of our high-quality modules, and we continuously seek new ways to enhance our resource efficiency throughout the value chain.
Drivers affecting demand
The rental modular space market size in the countries Cramo Adapteo operates in totalled about EUR 1.4 billion in 2018. Market is forecasted to grow about 9% p.a. reaching EUR 2.2 billion in 2023.
|Market overview and our position|
|Market size estimate 2018, MEUR1||Market position estimate 20181||Market CAGR 2017 – 2023, %1|
|Sweden||~290||#1||5 – 10|
|Norway||~110||#3||5 – 10|
|Germany||~750||#12||5 – 10|
1 Market studies
Over the long term, growing demand for rental services is supported by a number of megatrends, such as urbanisation, other demographic changes, scarcity of resources, sustainable development, digitalisation and the rise of the sharing economy. These, in turn, are transformed into growth drivers of the modular space business.
Over the next four years, we see several market drivers that have a significant impact on the demand for modular space solutions. They are:
- Renovation needs – leading to an increase in construction renovation projects, which create demand for site-specific modular space solutions
- A sudden drop in space – resulting from water damage, fire or other sudden unexpected incident
- Demographic changes and migration – rapidly changing the structure of services needed locally
- Modular space rental concept penetration
- Increasing new building volumes – new residential areas, creating demand for temporary and modular buildings
Nordic Modular Group in a nutshell
Nordic Modular Group, founded in 1956, is an established player in the Nordic modular space market, with operations that include the development, manufacturing, sale and rental of modular buildings. The companys main market is Sweden, but it also has operations in Norway, Denmark and Finland. It employs 230 people.
Nordic Modular Group primarily serves municipalities and large private companies with a focus on solutions for schools, daycares, accommodation and offices. It operates through three subsidiaries – Temporent AB, Nordic Modular Leasing AB and Flexator AB.
Like Cramo Adapteo, Temporent rents out modular solutions, with a fleet consisting of about 6,500 modules. Nordic Modular Leasing leases out modular units with a primary focus on longer-term contracts – five years or more. Flexator designs, manufactures and sells professional modular buildings based on standardised building systems, from site huts to advanced solutions. It has two manufacturing units in Sweden.