Introduction

Delivering on our Shape and Share growth strategy

Solid growth in sales, acquisitions in both of our divisions and a successful performance improvement in our Modular Space business are some of the most satisfying highlights of the year. A focus on digitalisation, innovation, sustainability and people development further bolstered our good performance.

In 2018, there was good demand for equipment rental and modular space in our main markets, and both our organic and inorganic sales growth were solidly supported by our two divisions. Furthermore, the Group’s profitability continued to improve, despite some challenges in some of our biggest markets. All Group-level financial targets were achieved. In addition, growth targets for the Equipment Rental division’s sales and for the Modular Space division’s rental sales were achieved.

The Equipment Rental division’s sales were up, buoyed by good demand. In Germany, KBS Infra, which was acquired at the beginning of the year, supported inorganic growth. However, the division’s performance was somewhat mixed. In Scandinavia and most of our Eastern and Central European countries, profitability continued to improve, although we are still not satisfied with our performance in Germany. In Finland, profitability was weighed down by more intense competition, which adversely affected both sales and profitability. Measures have been taken in both Germany and Finland to improve performance. The equipment rental outlook remains positive for 2019 despite economic uncertainties. In Sweden and Finland, the rental market still shows growth due to growth outside new residential construction.

I am particularly pleased with the positive development of the Modular Space division – both in sales and profitability. The solid measures to improve performance taken in 2017 and 2018 are already producing good results. There was good demand for modular space solutions in all the countries in the division, with demand especially strong in Finland. The acquisition of the Swedish-based modular space company Nordic Modular Group Holding AB in October further strengthened our position as a leading modular space service provider in Northern Europe. The market outlook for modular space rental is very promising, and we are well positioned to capture the forthcoming growth opportunities.

Value-adding acquisitions strengthen both divisions

The acquisition of a German construction site logistics company, KBS Infra, enhanced our position in the important Central European market and expanded our Equipment Rental division’s business model with value-adding services. KBS Infra offers extensive construction site planning and logistics services as well as site huts and on-site electricity. We see significant cross-selling potential with our current equipment rental offering. In addition, we can now offer our customers site logistics services, an interesting concept that we will further develop to also cover our other markets.

The acquisition of Nordic Modular Group is fully in line with our Shape and Share growth strategy since it strengthens our position in the Nordic modular space market and expands the business model for our Modular Space division, Cramo Adapteo. Going forward, we will also be able to offer long-term rental solutions as well as modular buildings for sale thanks to Nordic Modular Group’s in-house product development and manufacturing capabilities. Moreover, the transaction provides us with a steady platform for further international expansion of our operations.

The successful integration of acquired companies and future inorganic growth are crucial to our success. In order to ensure this, we enhanced our merger and acquisition competence with the appointment of Mr Mika Kouhi as Senior Vice President, M&A and Corporate Development, and as a member of the Cramo Group management team in September. 

Pursuing a Modular Space division spin-off

As noted earlier, in 2018 Cramo assessed strategic alternatives for its Modular Space business, Cramo Adapteo, since the modular space business has limited synergies with the equipment rental business. The objective of the assessment was to maximise long-term shareholder value for Cramo’s shareholders. Based on the outcome of this assessment, in December 2018 the Board of Directors of Cramo decided to pursue a spin-off of the company’s Modular Space business to its existing shareholders. The transaction and separate listing are expected to take place latest in the third quarter of 2019.

Driving the sharing economy

Cramo’s purpose is to drive the sharing economy. We strongly believe that the professional sharing of rental and other resources helps meet some of the most challenging concerns of our time – such as climate change, resource scarcity and the aspiration of sustainable development. By offering the easiest access possible to shared resources, we encourage our existing and potential customers to join the sharing economy.

Our purpose is closely connected to our responsible way of sharing sustainable resources. Sustainability is embedded in our strategy and business model, and we work hard to integrate it in all our operations and in our supply chain. Our efforts were recognised outside the company as well when we were honoured with the European Rental Association’s (ERA) Sustainability Committee Award 2018. In giving its reasoning for the award, the Committee described Cramo as a pioneer in developing a genuinely sustainable approach to rental.

Our vision, Shared Resources Simplified, is closely connected to the opportunities of digitalisation and thus helps us to realise our purpose. Digitalisation is one of the single most important enablers of more efficient and easily accessible sharing. In order to provide customers with services that best support their success, we maintain close co-operation with them from the start, throughout the innovation and pilot phases of their development projects. During the year, we continued to add new functionalities to our digital platform’s service offering in order to help customers operate more efficiently. We will continue to invest in digitalisation as well in the years ahead.

We are Shapers

At Cramo, we put a high value on collaboration, sharing knowledge, supporting and helping each other as well as on open-mindedness and innovativeness. As a continuation of our firm focus on people development, we launched our people promise, We are Shapers, at the beginning of the year. Cramo wants to shape the whole industry, and to make that happen we also need our people to share the same spirit and ambition. However, this promise also contains another message – everybody has a chance and is encouraged to shape their own development and career at our company.

A changing world works in our favour

The steady rise of the sharing economy and many global megatrends, such as migration, urbanisation, demographic changes and resource scarcity, drive the demand for sustainable rental services and solutions. This, in turn, has a positive impact on the operating environment of our equipment rental and modular space businesses. With our innovative solutions, digitalised offering and responsible way of operating, we are well positioned to capture the opportunities of the changing market and customer needs in the future.

I want to thank shareholders for your loyalty and trust in 2018 and wish EQT, our new largest shareholder, a warm welcome. We continue our efforts to generate increasing value for you in the long term by executing our Shape and Share growth strategy, an effort that is strongly supported by our future-oriented approach.

Sincerely,

Leif Gustafsson
President and CEO

Dividend per share, EUR and payout ratio, %

 

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1 2018 Board proposal