Altrad results show resilience despite Covid-19

Scaffolding, industrial services and equipment supplier Altrad reported a 17% decline in revenues to €2.59 billion for the year to 31 August. EBITDA profit was €360 million, down 22% on the previous year.

Altrad joint-CEO Ran Oren told International Rental News (IRN) the Group had performed in line with expectations during the first half, but was down 18 to 19% on expectations in the second half, due to the impact of Covid-19.

The pandemic had resulted in the postponement or cancellation of projects in Altrad’s markets, and European lockdowns had impacted its manufacturing and hire sales division.

Of Altrad’s revenues, 78% come from services, with equipment sales representing 22%. It operates in Europe, Africa, the Middle East, Asia, China and Australia.

The France-based company’s oil and gas related operations, which account for 28% of the business, had been adversely affected in the early stages of the pandemic. However, commodity prices had stabilised, allowing projects to progress. “With the price of oil now back at around $50 a barrel, confidence is returning,” Oren said.

Despite the second half decline in revenue and resulting margin pressure, “We feel fortunate to have come through the year better than anticipated in March when the impact of Covid-19 began”, he added.

Restructuring and cost management helped reduce the Group’s operating costs, enabling it to maintain its gross margins and EBITDA percentages at pre-Covid levels. The Group made redundancies, reducing staff numbers by around 6,000 to 35,000, he told IRN.

The scaffolding and equipment business had been resilient, with scaffolding hire remaining on par with the previous year, while sales also held firm, buoyed by access to low-cost credit.

The rental sector remains an “essential” part of Altrad’s activities, he told IRN. “Rental provides a strong and steady income stream, with loyal long-term customers. As our customer relationships and products continue to develop, we expect to be able to bring more solutions to the market at competitive prices, helping our customers grow their own businesses.” He added that the group anticipates a rebound in equipment sales in 2021.

The year also included wins, including a £350m renewal contract with French energy company EDF on its eight nuclear power stations in the UK for the next nine years.

It also saw the acquisition of construction company Adyard in Abu Dhabi. Adyard “will bring new expertise to the Altrad portfolio, along with potential for expansion plans further into the Middle East,” Oren told IRN.

UK business Altrad Belle, which makes light construction equipment, remained an “excellent fit” within the company, Oren told IRN, because it gave access to markets through its international sales channels.

Regarding Brexit, Oren said the main impact on Altrad would be currency uncertainty; “If Brexit leads to a reduction in the UK’s GDP and an impact on currency, that would be a concern for us.”

On Altrad’s longer term plans, particularly regarding expansion into new markets such as North America, “We don’t set limits on these things,” he told IRN. ”However, Altrad has many implantations in established markets, meaning it’s always been easier to grow our channels and businesses there.” The Group was open to North American opportunities should they arise, he said.

During the fiscal year, Altrad grew its services order book to €3,015 million from €2,316 million in 2019. It holds cash of €1,159 million compared to €911m in 2019 and net debt of €394 million compared to €510 million in 2019.