AS Storent Holdings interim report for 2d quarter 2024Insider information, 2024-07-31 16:00 CEST --
In the first half of 2024, Storent reached a consolidated revenue of almost 20 million euros. In order to accelerate its long-term growth, Storent has invested significantly in equipment, information technology and human resources. Such investments are the first precondition to any rental company to enable further growth. Investment decisions Storent management made based on upcoming years market potential and growth. According forecast of the construction market research company Forecon, the rental equipment market is expected to grow by 6% in 2025 in Baltics, and by 8% in Finland and 4% in Sweden in 2025. The largest growth, 11%, is expected to be in Latvia, which is the Groups biggest market. To be able to realize favorable market condition in 2025, the Group needs to make significant investments already in 2024.
During the first 6 months of 2024, Storent invested 15,5 million euros in replacement and expansion of its fleet. In the coming months, total investments in the fleet will reach 25 million euros. The investments in fleet have been made taking into account the specifics and demand of each market Storent operates in. Significant part of investments is spent on the product groups of lifts, earthmoving equipment, telescopic handlers and generators.
The profit indicators of the first half of the year were negatively affected by the increasing personnel costs, depreciation and significantly higher interest payments. Although the first half of the year ended with losses, the Group's management predicts a successful second half of the year and it is planned to end 2024 with a profit. In the rental turnover for first half of the year, the largest increase, 21%, was for split rented equipment. As it is the beginning of high season in rental, and the new equipment is just put into circulation, the rental income from Storent equipment is increasing every month. The forecast for July shows that income from own equipment will reach increase of 30%. By country the growth of rent income from own equipment shall reach 96% in Estonia, 41% in Sweden, 24% in Lithuania, 22% in Latvia and 15% in Finland.
The return of new investments is reflected in the financial indicators gradually. When companies invest intensively, their debt increases instantly but the effect on EBITDA will come in the next 12 months. As a result of the rapid investments, on 30.06.2024 Storent Holding exceeded the financial indicator Net Debt/EBITDA reaching 3.74 instead of the previously agreed 2.5. Larger amount of investment in equipment and IT increased Group’s liabilities in the short term while investments in human resources decreased EBITDA.
In mid-August, Storent will offer bondholders a vote on changing the financial indicators, allowing the NetDebt/EBITDA to be lower than 4 starting from the 3rd quarter of 2024 to the 2nd quarter of 2025, while starting from the third quarter of 2025, it will offer to reduce it to 3.5.
Additionally, Storent's management has made a forecast for the remaining months of the year and made sure that it secures cash flow, and the Group is able to cover all liabilities, including bond interest. Non-current fixed asset fair value has increased up to 89.6 million euros at the same time Group’s interest bearing debt is almost two times lower reaching 47.0 million euros. 54.1 million euro from tangible fixed assets are not pledged and fully belongs to Storent.
Baiba Onkele
Storent Holdings CFO
Mobile: + 371 29340012
E-mail: baiba.onkele@storent.com
www.storentholding.com
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