Year 2019 was both successful and challenging for us. Cramo’s partial demerger was successfully completed at the end of June 2019. Carrying out such a complex transaction required a major effort from our people in every Cramo country. I am very impressed with and proud of our employees’ great contribution.
With the more unstable and levelling market, 2019 was a challenging year for Cramo in terms of performance. The Group’s sales and organic sales decreased slightly and, as estimated, our profitability was weaker than in 2018. However, the Group’s cash flow was strong.
As soon as we recognised that the performance for the year would be less than satisfactory, we launched a Group-wide performance enhancement programme to strengthen our competitiveness in a tightening market situation and to improve our profit generation. The programme aimed at right-sizing the organisation and operating expenses after the demerger, resulting in a more streamlined cost base. The programme was fully executed by the end of 2019. The full effect of the programme will be reached in 2020. A large part of the summer and autumn was also dedicated to strategy creation, resulting in Cramo’s new financial targets in pursuit of increased growth, capital efficiency, leverage and shareholder return.
Becoming our customers’ productivity partner by delivering on our new strategy
A new, inspiring chapter for all of us at Cramo has begun as we start developing our company towards its full potential as a business fully focused on equipment rental. Our starting points are solid: our market position is strong in Europe, and we are a recognised industry frontrunner in sustainability and digitalisation, two areas where we continue to have high ambitions to lead the way.
There is no doubt that Cramo is still positioned as one of the strongest players on the market, as it has an extensive fleet, local presence and a broad range of services and solutions that give us good credibility as a supplier. Our strong values of commitment, credibility and creativity permeate our company and give us the advantage of strong customer relationships. Our new Cramo NXT strategy prepares us for the future through four focus areas. We will cement our market position through top-tier performance, expansion in the industrial segment, increased digitalisation and improved commercialisation of our services.
We are a company with a history of capturing the potential of our markets and we will continue to do so. Our Cramo NXT strategy is an integral part of differentiating ourselves through the customer value we create and of fulfilling our vision of your productivity partner in rental and beyond!
Focus on leveraging our operations and achieving business growth
Performance in our depot network is the foundation for leveraging our operations and achieving business growth. This entails ensuring that we have the right coverage, product assortments, logistical set-up and fleet utilisation so that we can optimise our cost base and improve our revenue streams. We aspire to have a depot network where every depot contributes to improving our profitability. Our market position is an important part of our growth story. We aim to adapt our geographical footprint with the intention of being number one or two in the marketplace where we operate. This may be in a region or in a whole country. We want to be the one shaping the business environment and driving the customer experience in the equipment rental market. A strong position allows us to utilise our scale, which, in turn, contributes to efficient operations.
Efficient operations involve strengthening and developing our business processes to further improve our way of working. Digitalisation and increased customer demands are putting new challenges on our organisation. By sharing best practice and developing new tools we can create new ways of working that increase efficiency not only for us internally, but also for our customers.
Differentiation through our innovative service offering
Services that differentiate us from the competition play a central role in delivering on our vision. Customers expect more and more advanced services that meet their needs and solve their key concerns related to productivity, sustainability and safety. We aim to harness this potential by offering a wide range of advanced construction site logistics and other services, often based on digital solutions to help customers run their sites more efficiently.
We have chosen to take the lead in the digitalisation of our industry. At the beginning of 2019, we launched an eCommerce platform and two mobile applications that were very well received. We aim to continue to create innovative digital services that are based on customer needs as well as on data collected by our connected fleet.
Continued focus on sustainability and on our people
Sustainability is embedded in our strategy, and we have assured our industry position as a frontrunner in this field. We have invested in developing our sustainability framework, Cramo Care, and have worked systematically to improve our sustainability targets. The next step is to bring circularity into sharper focus and develop it as a part of our business rationale. We participated in a joint project together with one of our major customers and investigated the requirements for a CO2-free construction project. Our part in this project was to identify how we could eliminate the carbon footprint of our equipment.
“We are Shapers” is our people promise and emphasises how we at Cramo focus on the development of our people. We know that people are the key factor to our future success. We take responsibility to align the development of our employees with our business strategy and ensure that people are a business agenda priority. We also recognise the importance of diversity and equality as prerequisites for building a culture that encourages innovation and sustainability.
Public tender offer for all shares in Cramo by Boels approved early 2020
The consolidation of the European equipment rental industry, a trend in which also Cramo has been an active player, continued to intensify. On 11 November 2019, Boels Topholding B.V., one of the most renowned equipment rental companies in Europe, and Cramo entered into a Combination Agreement, pursuant to which Boels made a voluntary recommended public cash tender offer to purchase all of the issued and outstanding shares in Cramo. The offer was approved on 5 February 2020.
The combination of Cramo and Boels Rental will create a more competitive organisation that is better positioned for greater growth, increased profitability and with the financial strength to better manage market challenges and level out economic volatility. The merger is a great strategic fit and utilises the strengths of each respective company. Factors such as the complementary geographical footprint, a stronger combined presence in mainland Europe, the optimised portfolio of products and services offered by joint operations, and the improved rental expertise through the combination of first-rate teams are examples of how the combined company will be a true European rental leader in quality and scale.
Ready to take Cramo to the next level
We have now taken the right steps to improve performance and set the foundation to differentiate ourselves from the competition. With our innovative solutions, digitalised offering, and committed employees, we are well positioned to capture the opportunities of changing markets and customer needs.
We are on the brink of starting a new journey and I could not be more excited about taking Cramo to the next level!
President and CEO
Financial targets 2019–2023
- Double-digit EPS growth between 2019 and 2023¹
- Operative ROCE² >15% by year-end 2023
- Net debt to EBITDA lower than 3.0x
- Dividend pay-out ratio >50% of EPS³
1 CAGR. Comparable EPS
2 Excluding goodwill and tangible assets. Operative ROCE defined as comparable EBITA to average of tangible assets and net working capital
3 Excess capital can be distributed through dividends or share repurchases