Capital Market Day 2009 Strategy update - Ramirent

Capital Market Day 2009
Strategy update
CEO Magnus Rosén

Forward-looking statements
A number of forward-looking statements will be made during
this presentation. Forward-looking statements are any
statements that are not historical facts. These statements are
based on current decisions and plans and currently known
factors. They involve risks and uncertainties which may cause
the actual results to materially differ from the results currently
expected by Ramirent.
This presentation is being made on June 11,2009. The content
of this presentation contains time-sensitive information that is
accurate only as of the time hereof.
If any portion of this presentation is rebroadcast,
retransmitted or redistributed at a later date, Ramirent will not
be reviewing or updating the material that is contained herein.

Executive summary
– Best-in-class equipment rental one-stop-shop
– Leading market position in Northern, Central and
Eastern Europe
– Cost saving and cash flow enhancing measures in
focus
– Counter-cyclical free cash flow during an economic
downturn
– Long-term growth drivers in place
Strong and industry leading operational profile
3 CMD 2009 © 2009 Ramirent

Overview

Ramirent overview
The leading equipment rental company in Northern, Central and Eastern Europe
– Founded 1955
– Diversified end markets with over
100,000 rental customers
– Industry leading operational profile
– Young fleet of over 200 000 rental
items
– Listed on NASDAQ OMX Helsinki 1998
– Highly experienced management team
Revenue breakdown by type
– FY 08 Sales of EUR 703 million, EBIT
of 11.3%
– Q1 09 Sales 122 million, EBIT of 5.9%
– 350 rental outlets
– 3500 employees
Revenue breakdown by customer
69 % Rental income
Rental related
services and
sales
20 %
Construction
Non-construction
5 CMD 2009 © 2009 Ramirent

Geographic diversity
- Extensive geographic footprint
Revenue by operating segment
Market coverage map
Finland
23%
Sweden
26%
Local head office
Outlet
Europe
Central
11%
Europe
East
8%
Denmark
9%
Norway
23%
Outlets by country
Finland
Sweden
Hungary
Norway
Slovakia
Denmark
Czech
Republic
Poland
Russia
Ukraine
Estonia
Latvia
6 CMD 2009 Lihtuania © 2009 Ramirent

One-Stop-Shop supplier to
a diversified customer base
Suppliers
• Lifts and hoists
• Tower cranes
• Heavy equipment
• Modules
• Formworks
• Light equipment
• Scaffolding
• Power & heating
• Other
Outlet network
One-Stop-Shop
Customers
• Construction
Companies
• Industry
• Infrastructure
• Public
• Households
7 CMD 2009 © 2009 Ramirent

Comprehensive rental offering divided into 8
main product groups
Lifts &
Hoists
Modules
Scaffolding
Power &
Heating
Light
Equipment
Tower
Cranes
Formworks
Heavy
Equipment
8 CMD 2009 © 2009 Ramirent

Rental industry growth in Europe
Attractive and growing industry
– Growth drivers are non-residential
construction, industrial activity and
increased rental penetration
– Fragmented European rental market of
EUR 33 bn
– Top 50 rental companies comprise
33% of the European market
70 %
60 %
50 %
40 %
30 %
20 %
10 %
0 %
Rental penetration
Europe avg. Finland Denmark Sweden UK
Source: ERA 2008 report, Note: Finland company estimate
Top 10 companies share of total market ~15%
Attractive CEE construction markets
142
Sarens
GAM
Hewden
Select Plant
Hire
Speedy Hire
Algeco
Scotsman
Cramo
Mediaco
Lifting
Inhabitants
(million)
Construction Output
(billion EUR)
34
5
30
5
24
9
38 35
20
27
5
1 3
1 3
3 3
48
95
Ramirent
Loxam
10
5 5
10 11
8
Others
Source: Euroconstruct Jan 2008
Continued opportunity for growth and consolidation
9 CMD 2009 © 2009 Ramirent

Clear benefits drive rental penetration
growth
– Financial benefits
– Release of capital for your core business
– Minimizing assets & better cost control
– No transportation vehicle fleet
– Equipment/service benefits
– Availability of state-of-the art equipment
– Use it when you need it
– Proximity & delivery on the site
– Safety benefits
– Pre-rental safety check
– Regulation compliance
– Well maintained fleet
– Environmental benefits
– Environmental loading is reduced if more
people use the same machine
Rental equipment is mission critical, but only 2-3% of customer’s project cost
10 CMD 2009 © 2009 Ramirent

Ramirent ranks # 2 on the fragmented
European market and # 8 globally
10 largest rental companies in Europe 2008 10 largest rental companies globally 2008
Loxam
Ramirent
Cramo
Algeko Scostman (US)
Speedy Hire
Select Plant Hire
Hewden
Sarens
GAM
Mediaco Lifting
United Rentals
RSC Equipment Rental
Hertz Equipment Rental
Ashtead Group
Aggreko
Algeko Scotsman
Loxam
Ramirent
Nishio Rent All
Nikken Corp
0 200 400 600 800 1000
MEUR
0 500 1000 1500 2000
MEUR
Source: IRN June 2009
11 CMD 2009 © 2009 Ramirent

Managing in an
economic
downturn

Ramirent business model: managing through
an economic downturn
Fleet management
• Right size fleet to maintain high utilisation
• Transfer of equipment according to demand
• Adjusting fleet to Ramirent Pan-European standard
Sales strategy
• Pursue new customers and enter new customer industries
• Increase long-term agreements
Rental rates
• Maintain price discipline for value provided to customers
Cost management
Free cash flow
• Adjust spending/ utilise operating metrics to manage costs
• Consolidate or close underperforming outlets
• Develop scalable business model following demand curve
• Counter-cyclical
• Capex halted, all capex need covered by internal transfers
• Used to amortise debt
Emerge stronger and with enhanced risk profile
13 CMD 2009 © 2009 Ramirent

Managing the business cycle’s three phases:
Stabilisation, Positioning and Growth
Growth Stabilisation Positioning Growth
Strong market
conditions and
substantial growth
2004-2008 Business cycle
Strategic themes
Operational themes
• Safe-guard profitability and • Realize synergies –
1 3
cash flow
“working as one”
• Develop Group strategy • Operational excellence
2
4
Product, customer, and
market portfolio & financing
• Consolidate market –
Outsourcing cases
• Consolidate market –
Bolt-on acquisitions
• Pricing discipline
• Prepare contingency plans
• Reduce costs and transform
fixed costs to variable
• Reduce financial risk, focus
on A/R and credits
• No new fleet investments,
transfers to where demand
• Amortise debt
• Develop product,
customer and market
portfolio
• Secure competence
supply
• Expand value offering
• Incremental capex
requirements
• Penetration to increase
• Profitable growth
5
• Consolidate market –
Strategic acquisitions
• Vision for the future
• Growth capex required
14 CMD 2009 © 2009 Ramirent

New management and company structure in order to
shorten decision-making paths and drive synergies
CEO
Finance
and IT
Fleet
Management
Communications
and Branding
Legal
Affairs
Scandinavia
Sweden
Norway
Denmark
East
Finland
Europe East
Russia
Ukraine
Estonia
Latvia
Lithuania
Central
Europe Central
Poland
Czech Rep.
Slovakia
Hungary
15 CMD 2009 © 2009 Ramirent

Young and diversified fleet reduces need for
new investments
Ramirent fleet structure
• Attractive age structure of
fleet with 2/3 of fleet acquired
in the last 3-4 years
Light machinery
Formworks
Modules
• Pan-European fleet standards
support high mobility and fleet
sharing
Heavy
machinery
Power & heating
Scaffolding
Lifts
Cranes and
hoists
Note! As per March 2009 as percentage
of fleet acquisition cost
Excellent condition of fleet drives high availability and reliability
16 CMD 2009 © 2009 Ramirent

Long-term value
enhancing
strategy

Currently diligent focus on profitability and cash flow in
order to maintain long-term value enhancing strategy
Current management focus
Down sizing the cost base
WC management
Fleet management
Long-term value enhancing strategy
1.
Developing the
product offering
– Comprehensive rental solutions “One stop shop”
– Increase added value services
– Optimise mix of long-term and short-term rental agreements
Developing the
business model
Widening the customer base
Broad market presence
Fleet management
Economies of scale
– Diversify within the construction industry
– Focus on current non-construction customer groups to balance the cyclicality
– Target new customer groups in the industry and public sector
– Maintain a well diversified market presence to avoid dependence on single market
– Mix of mature and emerging market beneficial in the longer term
– Actively manage the fleet between markets to optimise utilisation
– Long-term agreements with chosen suppliers harmonises the fleet
– Risk reduction by adequate mix of owned and leased fleet
– Pan European fleet
– Capturing synergies from being market leader in markets where present
– Duplication of processes (eg. business policies, operational processes)
2.
Grow the
business
Focus on organic growth
Selective acquisitions
18 CMD 2009 © 2009 Ramirent
– Structural growth exists for many years in all Ramirent’s markets
(continuously increased penetration rate and equipment usage)
– Highly fragmented market allows for acquisitive growth
– ”White space markets”
– Outsourcing

Rental is our core; market, customer, fleet, risk
mgmt and operational excellence provides hedge
Broad market portfolio
• Operations in attractive
markets in Nordics and
CEE
• #1-2 market position
Short-term:
• Expansion within existing
countries prioritized
Long-term:
• Explore new opportunities
in CEE
Operational excellence
• A single common
operational model – Rami
platform
• Collect and share best
practice
Area
• Target
• Actions
Rental of
equipment
and related
services
Risk management
• Low operational risk
• Low financial risk
Diverse customer base
• Mix of small and large
customers in
construction (primarily),
infrastructure, industry,
public sector, and
households
• Increase number of
industrial customers
Diverse and flexible fleet
• Wide product assortment
mainly used in
construction or related
activities
• 100% pan-European
fleet
• Standardization of fleet
• Evaluate products for
long-term rental
19 CMD 2009 © 2009 Ramirent

Long-term growth drivers still in place
Key long-term growth drivers
– 1 Highly attractive growth potential in
emerging construction markets
• Undeveloped rental markets
– 2 Increasing penetration rates
– 3 Increased equipment usage
– 4 Very fragmented market allows for
continued market consolidation
• 14,000 rental companies in Europe
Ramirent #2 with 2% market share
• 5 Entry into new markets
20 CMD 2009 © 2009 Ramirent
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Q&A