Oct. 31 (Bloomberg) -- Cramo Oyj, a Finnish company renting out construction machinery, jumped the most in almost 2 1/2 years after third-quarter earnings beat estimates and it announced a joint venture in Russia.
The shares rose as much as 14 percent. Net income in the quarter was 18.1 million euros ($23.5 million), the Vantaa-based company said in a statement today. That exceeded the 14.3 million-euro average estimate of seven analysts in a Bloomberg survey. Cramo also announced a joint venture today with Ramirent Oyj for their Russian and Ukrainian units in equipment rental.
“The impact from the efficiency and cost-cut program was a bit larger than expected,” Tomi Tiilola, an analyst at Swedbank AB, said by phone. “It might be that the joint venture also gives a small positive boost.” He has a hold recommendation on the stock with a 12-month share-price estimate of 9 euros.
Cost reductions begun in the second quarter started to show in the third-quarter result, Cramo said. The company will pay Ramirent about 9.2 million euros for an equal share in the new venture, which it said is expected to receive approval from competition authorities in January. The combined business is estimated to have annual sales of 52 million euros in 2012 and offers an opportunity for expansion, Cramo said.
Cramo climbed as much as 1.02 euros to 8.07 euros, the biggest intraday gain since May 10, 2010. The shares were up 7.9 percent at 7.61 euros as of 12:52 p.m. Ramirent rose 6.3 percent to 5.75 euros.
“The Russian and Ukrainian markets offer significant growth potential for equipment rental and through the joint venture we have a strong foundation to invest for accelerated growth,” Cramo said.
Chief Executive Officer Vesa Koivula said in an Aug. 8 teleconference that Cramo was seeking about 10 million euros of savings as financial difficulties facing Europe hurt construction prospects.
Cramo’s profit had missed analyst estimates in the previous three quarters. The company’s shares dropped 11 percent this year before today, extending last year’s descent of 53 percent.
“Cramo has performed quite badly due to profitability concerns, perhaps there were some fears related to the full-year guidance,” Tiilola said. “Now that the third quarter surprised positively, we’re seeing a relief rally.”
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