Ramirent Plc      Stock Exchange Release    February 8, 2019 at 9.05 am EET

On December 3, 2018, Ramirent announced that it had signed an agreement to divest its Danish equipment rental business to G.S.V. Materieludlejning A/S, Denmark's largest equipment rental company. The enterprise value of the transaction is approximately EUR 33 million. The closing is expected to take place in the beginning of 2019 and is subject to customary closing conditions and approval of competition authorities.

The divested operations are reported as discontinued operations in the fourth quarter 2018 onwards. Their result is reported in one line in the statement of income under "Result from discontinued operations" and the Group's EBIT and comparable EBIT have been restated for the current and previous year. The capital employed of the divested operations is reported under "Assets held for sale" and "Liabilities associated with assets held for sale" from Q4 2018 onwards until the closing of transaction.

Following the merging of Baltics and Europe Central segments and the divestment of the Danish rental operations, Ramirent publishes its financial information for continuing operations according to the following four operating segments:

  • Sweden
  • Finland
  • Eastern Europe (Estonia, Latvia, Lithuania, Poland, Czech Republic and Slovakia)
  • Norway

The financial information according to the new segment structure for the financial year 2018 and 2017:

NET SALES Q1 2018 Q2 2018 Q3 2018 Q4 2018 Full year 2018
(MEUR)          
Sweden 68.6 70.2 64.4 69.0 272.2
Finland 44.7 46.9 49.9 52.6 194.1
Eastern Europe 25.7 29.8 32.8 31.3 119.6
Norway 28.0 29.9 31.1 35.2 124.2
Other sales and elimination of sales between segments 0.5 0.1 0.5 0.4 1.6
Net sales, total 167.5 177.0 178.6 188.6 711.7
           
             
EBIT Q1 2018 Q2 2018 Q3 2018 Q4 2018 Full year 2018
(MEUR and % of net sales)          
Sweden 11.7 10.4 2.7 10.4 35.2
  17.1% 14.8% 4.2% 15.1% 12.9%
Finland 5.1 6.5 5.2 6.6 23.5
  11.5% 13.9% 10.5% 12.5% 12.1%
Eastern Europe 5.1 8.2 10.2 7.5 31.0
  19.7% 27.3% 31.3% 24.1% 25.9%
Norway 1.2 2.5 -10.5 -3.3 -10.1
  4.1% 8.4% -33.6% -9.3% -8.1%
Unallocated items -1.9 -1.3 -2.5 -7.0 -12.7
Group EBIT 21.2 26.2 5.2 14.3 66.9
  12.7% 14.8% 2.9% 7.6% 9.4%
           
Comparable EBIT Q1 2018 Q2 2018 Q3 2018 Q4 2018 Full year 2018
(MEUR and % of net sales)          
Sweden 11.7 10.4 12.7 9.1 43.9
  17.1% 14.8% 19.7% 13.2% 16.1%
Finland 5.1 6.5 9.5 6.6 27.8
  11.5% 13.9% 19.1% 12.5% 14.3%
Eastern Europe 5.1 8.2 10.2 7.5 31.0
  19.7% 27.3% 31.3% 24.1% 25.9%
Norway 1.2 2.5 4.1 4.0 11.8
  4.1% 8.4% 13.1% 11.4% 9.5%
Unallocated items -1.9 -1.3 -0.8 -3.6 -7.6
Group Comparable EBIT 21.2 26.2 35.8 23.6 106.8
  12.7% 14.8% 19.4% 12.5% 15.0%
             
NET SALES Q1 2017 Q2 2017 Q3 2017 Q4 2017 Full year 2017
(MEUR)          
Sweden 60.4 63.2 64.5 72.3 260.3
Finland 42.8 46.4 49.8 52.5 191.5
Eastern Europe 22.8 27.0 31.6 29.6 111.0
Norway 29.0 27.9 29.1 35.2 121.2
Other sales and elimination of sales between segments 0.3 0.4 0.6 0.2 1.5
Net sales, total 155.3 164.9 175.5 189.7 685.5
           
           
EBIT Q1 2017 Q2 2017 Q3 2017 Q4 2017 Full year 2017
(MEUR and % of net sales)          
Sweden 7.8 8.1 10.4 10.1 36.4
  12.9% 12.8% 16.2% 13.9% 14.0%
Finland 3.5 6.3 8.9 6.6 25.3
  8.3% 13.5% 17.9% 12.5% 13.2%
Eastern Europe 2.8 5.9 9.1 5.7 23.5
  12.4% 21.7% 28.8% 19.4% 21.2%
Norway 0.8 1.6 3.0 4.5 10.0
  2.9% 5.8% 10.3% 12.8% 8.2%
Unallocated items -0.7 -1.9 0.4 -2.2 -4.4
Group EBIT 14.4 19.9 31.8 24.7 90.7
  9.3% 12.1% 18.1% 13.0% 13.2%
           
Comparable EBIT Q1 2017 Q2 2017 Q3 2017 Q4 2017 Full year 2017
(MEUR and % of net sales)          
Sweden 7.8 8.1 10.4 10.1 36.4
  12.9% 12.8% 16.2% 13.9% 14.0%
Finland 3.5 6.3 8.9 6.6 25.3
  8.3% 13.5% 17.9% 12.5% 13.2%
Eastern Europe 2.8 5.9 9.1 5.7 23.5
  12.4% 21.7% 28.8% 19.4% 21.2%
Norway 0.8 1.6 3.0 3.2 8.7
  2.9% 5.8% 10.3% 9.1% 7.1%
Unallocated items -0.7 -1.9 0.4 -2.2 -4.4
Group Comparable EBIT 14.4 19.9 31.8 23.4 89.4
Comparable EBIT 9.3% 12.1% 18.1% 12.3% 13.0%

Calculation of return on capital employed (ROCE) and return on equity (ROE):

The treatment of Ramirent's Danish rental operations to be divested as discontinued has an impact on Group reported EBIT and therefore affects also return on capital employed.

Further to the decision to divest the Danish operations, Ramirent has updated also its calculation method of key comparable financial performance indicators: comparable earnings per share (EPS), comparable return on capital employed, ROCE % and comparable return on equity, ROE %, as of Q4 2018. The updated calculation method reflects only the continuing operations in the key figure.

The key figures are defined as follows:

Comparable earnings per share, EPS (EUR): Result for the period +/- non-controlling interest's share of result for the period - items affecting comparability
  Average number of shares adjusted for share issued during the financial period
   
Return on capital employed, ROCE %: EBIT x 100 (rolling 12 months)
  Group or segment capital employed (average of last 5 quarter end values)
   
Comparable return on capital employed, ROCE %: (EBIT - items affecting comparability in EBIT) x 100 (rolling 12 months)
  Group or segment capital employed - items affecting comparability in capital employed ( average of last 5 quarter end values)
   
Comparable return on equity, ROE %: (Result for the period - items affecting comparability) x 100 (rolling 12 months) 
  Total equity - items affecting comparability in equity ( average of last 5 quarter end values)

   

The comparative figures have been restated accordingly and are presented in the table below.

.

Return on capital employed (ROCE %) Mar 31, Jun 30, Sep 30, Dec 31,
  2018 2018 2018 2018
Group, earlier definition 15.0% 15.7% 11.8%  
Group, revised definition 15.1% 15.8% 11.7% 10.2%
         
  Mar 31, Jun 30, Sep 30, Dec 31,
  2017 2017 2017 2017
Group, earlier definition 7.6% 8.4% 13.3% 13.8%
Group, revised definition 7.6% 8.4% 13.2% 14.0%
         
Comparable return on capital employed (ROCE %) Mar 31, Jun 30, Sep 30, Dec 31,
  2018 2018 2018 2018
Group, earlier definition 15.2% 15.9% 16.5%  
Group, revised definition 15.7% 16.5% 16.8% 16.8%
         
  Mar 31, Jun 30, Sep 30, Dec 31,
  2017 2017 2017 2017
Group, earlier definition 10.8% 11.4% 13.1% 13.9%
Group, revised definition 11.3% 11.9% 13.7% 14.4%
         
Comparable return on equity (ROE %) Mar 31, Jun 30, Sep 30, Dec 31,
  2018 2018 2018 2018
Group, earlier definition 25.0% 27.2% 28.0%  
Group, revised definition 24.6% 26.7% 27.3% 26.7%
         
  Mar 31, Jun 30, Sep 30, Dec 31,
  2017 2017 2017 2017
Group, earlier definition 15.3% 16.4% 20.1% 22.0%
Group, revised definition 15.2% 16.4% 20.0% 21.7%

Impact of IFRS 16 on financial key performance indicators:

Ramirent has adopted IFRS 16 "Leases" from January 1, 2019 using the modified retrospective approach, which does not require restatement of the comparative periods. The cumulative impact of implementation is accounted for as an adjustment in the opening equity. IFRS 16 requires that lease contracts are recognized in the balance sheet as assets and interest bearing liabilities. Lease expenses in the income statement are replaced by depreciation and interest cost. Adoption of the new standard will have effect to many key figures, e.g. EBITDA and EBIT will increase, equity ratio and ROCE-% will decrease and net debt and net debt to EBITDA will increase.

As at the reporting date, Ramirent has non-cancellable operating lease commitments of EUR 88.0 million. The group estimates that approximately 1-5% of these relate to payments for short-term and low value leases which will not be capitalized but recognized on a straight-line basis as an expense in profit or loss. As the short-term premises lease contracts as well as premises lease agreements with indefinite term and short termination period are included in the calculation of the right-of-use asset, the total amount to be capitalized will be higher than the current off balance lease commitment. According to the Group's impact analysis the amount to be capitalized as a right-of-use asset and a lease liability at the transition on January 1, 2019 will total approximately EUR 110 million. The impact on 2018 EBIT is estimated to have been positive EUR 1.4 million.

IFRS 16 impact on KPIs 2018 2018 with
  Actual IFRS 16 impact
EBITDA 202.9 233.7
Comparable EBIT 106.8 108.2
Net debt 350.6 459.3
Net debt to EBITDA   1.7   2.0
Return on capital employed, ROCE % 10.2% 8.9%
Comparable return on capital employed, ROCE % 16.8% 14.5%

Ramirent's financial targets for 2018-2020 have been revised due to adoption IFRS 16:

Due to implementation of IFRS 16, the Board decided on February 7, 2019 to revise the financial target for Net debt/EBITDA ratio from <2.5x to < 2.8x at end of each fiscal year. All other financial targets remain unchanged. After the change financial targets are:

     
Indicator Target level  
EPS growth (CAGR) Double digit % over 2018-2020
ROCE 16% by the end of 2020
Dividend payout ratio > 50% of net profit for the year
Net debt to EBITDA < 2.8x at end of each fiscal year

Further information: Jonas Söderkvist, interim Chief Financial Officer (CFO), +46 8 624 9502, jonas.soderkvist@ramirent.com

RAMIRENT is a leading service company offering equipment rental for construction and other industries. Our mission is to help our customers gear up on safety and efficiency by delivering great equipment and smooth service with a smile. We have 2,905 co-workers at 294 customer centers across 10 countries in northern and eastern Europe. In 2018, Ramirent Group sales reached a total of EUR 712 million. Ramirent is listed on the Nasdaq Helsinki (RAMI). Ramirent - Gear Up. Equipment rental at your service

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