Loxam’s business model tests economic crisis

In 2020, Loxam achieved a turnover of 2 billion euros, remained profitable and perished, thus demonstrating the relevance of its strategy. the explanation.

If the previous year was unexpectedly marked as a crisis because it was violent and very different from previous ones, then 2020 would be used by management to conduct a full-scale stress test for the entire group. The integration of Ramirent, N ° 2 into Europe was intensified due to its Scandinavian geography for rent and leader and the circumstances in Central Europe. This was also accompanied by a merger with companies that Luxum held in these countries as well as restructuring central services.

Thus, thanks to the implementation of robust protocols for the safety of both employees and customers, service continuity has been ensured by keeping all branches open. Efforts by customers and for the fourth consecutive year, at record levels in the year 2020, were formally received with a difference of “year of service” and an NPS of 60.

Stephan Heinen, CEO of Loxum Group : « We passed the Kovid stress test in 2020 and are ready to take advantage of the recovery when it recovers. »

The year 2020 has made it possible to demonstrate the relevance and tenacity of our strategy and to accelerate a certain number of changes. “ With a turnover of two billion euros, thanks to Ramirent’s contribution, but on a comparable structure, we consolidate our position as leaders in Europe and are ranked fourth in the world », Comments Stéphane Hénon, CEO of Loxam Group. ” Despite the decline in turnover, we have been successful in maintaining the level of profitability measured by 37% of the EBITDA margin. In recent years, Hyun, Lavendon and Ramirent have a 60% share of our international business, with recent acquisitions outstripping 30 countries with presence in 30 countries. “. For the record, this share was only 20% four years ago. Due to physical disturbances, conditions were favorable for accelerating the digital transformation of the group, particularly in the area of ​​dematerialization. Continually, there has been considerable growth in online payments, with more than one in two invoices now being demolished. As an indication, the lessee has sent more than one lakh electronic invoices to its customers, while 30,000 professionals use the MyLoxam portal to consult their contracts, reserve equipment or edit their invoices.

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In line with the actions initiated, the CSR commitment was enforced and manifested by the creation of Luxmed, a subsidiary dedicated to the turnkey supply of telemedicine units. The latter was mobilized for a screening of Kovid. “Our CSR policy has also been strengthened by the renewal but above the entire set of ISO 9001, ISO 14001 and ISO 45001 certifications. », Notes Stephen Hannon. “ This CSR policy has been recognized as being very successful by non-financial valuation agencies such as EcoVedis or Vigio or Sustainable Analytics, which has given us an excellent rating that ranks us among the top rated companies. “. It is this same CSR policy that led to the first sponsorship action in the context of the reconstruction of the Notre-Dame-de-Paris Cathedral and the establishment of a storage center for the remains of the cathedral. Finally, the lessee has confirmed his commitment to the game with the signing of a partnership agreement for the Rugby World Cup which will take place in France in 2023.

Three strategic axes of diversification have been defined which have contributed to the strong resilience of the plaque in 2020:
-Depositions, Which thanks to its diversity makes it possible to include the effects of the epidemic, the time and intensity varies from one continent to another continent and from one country to another. The case of France is particularly significant, with a collapse of over 80% of activity at the height of the crisis, followed by a very strong recovery in the May – August period. However, activity levels remained down in the last quarter due to the persistence of some restrictions, which still penalize certain activities and special events. With the exception of Southern Europe (Spain, Italy, Portugal), which experienced similar growth to France, Northern Europe was much less affected, even, at the beginning of the year, an acceleration of activity. As Stephen Heinen explains, “ International polls and especially Ramirent played the shock absorber of this crisis “. In fact, abroad, the Middle East and the United Kingdom have been affected elsewhere. Geographic diversification strategy has proved to be a win in the early 2000s.
-LE park, Which is under the influence of the acquisition of Ramirent, sees more contribution from modular construction and energy / heat weighing. This is particularly true for the first product family, which generated 90,000 units and with a turnover in excess of 200 million euros, now the second largest in the Loxam group after the rise of the people.
CustomerE, now achieved 40% turnover “excluding construction”, thanks to the triumph of new customer profiles. From now on, buildings (43%) and public works (17%) reveal less plaque of their cyclic nature. This diversification constitutes an important factor of flexibility, even though each area of ​​activity is cyclic, their cycle is different which makes it possible to linearize the activity optimally.

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A year ago, during the first imprisonment, Loxam stopped its investment program altogether. In fact, after coming out of imprisonment, investment resumed, but the level of activity emerging from the crisis was taken into account. In this logic, 2020 investments were limited to 190 million euros for the park. They want to be consistent with the situation encountered. Modular construction, among privileged families, is requested by customers to meet health safety regulations. Logically, the product offering is expanded.
The amount of improvements or equipment withdrawals remained stable from one year to the next, just below 300 million euros in gross value. In fact, the policy has not changed, regarding technical decisions when devices no longer meet the brand’s standards. Since the volume of equipment exceeds the investment for about 100 million euros, the value of the fleet decreases by about 2% in 2020. And in 2021? Investment will increase by 50%, while our reforms will be rather steady.

Investment will increase by 50% this year

Another feature of the previous year in terms of profit is cash flow. The lessee has significantly increased its liquidity to assure its stakeholders. Being less recognized internationally than France, this lessee had to reassure its employees abroad, its suppliers and its partners. For this he requested an EMP in France for 25% turnover or 230 million euros. This action was also taken in subsidiaries where it was possible, such as in Spain, Italy and Switzerland, to finance a total of 260 million euros and therefore additional liquidity. These loans, which have not been used, still appear in favor of their balance sheet assets. In 2020, the lessee generated significant positive cash flow through its operations. This is one of the features of the model “ Luxem », Which consumes cash and therefore contributes to indebtedness during the growth phase of the activity and which, conversely, generates additional cash through less investment and reducing the need for working capital. Thus, the combination of the implementation of PGE and a positive cash flow brought the cash to a record level of EUR 630 million on December 31, 2020, in the balance sheet and undisclosed bank line of credit bank of 75 million euros, or. 705 million Euros which will assure the lessee’s stakeholders.

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Photo: The promotion of appliances with optional engines with 100% diesel or gasoline is structured around the Locksgreen range

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About the Author: Forrest Morton

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