Finning, the world’s largest Caterpillar dealership posted a 7-percent revenue increase in the first quarter, totaling $1.7 billion, as higher revenues in Canada and the U.K. and Ireland more than offset a decline in South America. Product support revenues jumped 9 percent to record levels driven by improved demand for parts in Canada, mostly in mining applications.
EBIT of $111 million was a 5-percent decrease compared to the first quarter of 2013, reflecting lower sales volumes in South America and lower gross profit margins in Canada. The order backlog of $1.3 billion at the end of the first quarter was up by about 45 percent from $0.9 billion at the end of December 2013, driven primarily by record order intake in Canada, including an equipment order for $260 million from an existing oil sands producer for a fleet expansion.
Rental revenues declined by 6 percent with a slower start to the year in all operations. Used equipment sales were also down slightly.
“Overall, we generated solid top-line growth and increased our order backlog by over 45 percent,” said Scott Thomson, president and CEO of Finning International. “The market environment in South America is looking more challenging than we first thought and we expect that to continue through 2014. In Canada, I was pleased with our revenue growth during the quarter but our profitability was impacted by higher new equipment sales in the revenue mix and a higher proportion of sales that were lower margin mining machines. While higher sales activity drove an increase in invested capital and negative free cash flow, we were still able to modestly improve capital efficiency.”
Overall revenues increased 18 percent in Canada driven by improved market activity in Western Canada compared to the first quarter of 2013. New equipment sales increased 35 percent, and product support revenues jumped 13 percent.
Based in Vancouver, B.C., Canada, Finning is Caterpillar dealer in Western Canada, Chile, Argentina, Bolivia, Uruguay, the United Kingdom and Ireland. The company is No. 10 on the RER 100.