Finning International reported quarterly revenues of $1.62 billion, an 8-percent decrease compared to the second quarter of 2012. However, equipment rental revenues increased 1.6 percent from $91.3 million a year ago to $92.8 million this year. For the first six months of 2013, total company revenues dropped 2 percent from $3.24 billion in 2012 to $3.18 billion this year, while rental revenue edged up 1.9 percent from $182.5 million a year ago to $185.9 million this year.
A decline in new equipment sales led to lower total revenues in Canada and the U.K. and Ireland, partly offset by higher revenues in South America. Product support increased in all operations and was up 12 percent compared to the second quarter of 2012. Quarterly earnings before finance costs and income taxes rose by 2 percent to $123 million, primarily because of higher gross profit from product support. Quarterly EBIT margin was 7.6 percent, up from 6.8 percent in Q212, because of improved operating results in Canada.
New president and CEO Scott Thomson began his tenure. “I’ve spent my first eight weeks at Finning visiting all our regions and meeting with employees, customers and representatives from Caterpillar,” said Thomson. “Those discussions have reaffirmed my confidence that we have a strong foundation, highly committed employees and the right priorities in place. To deliver on Finning’s full potential, my priority will be to accelerate the progress underway to optimize profitability through the business cycle, improve the customer experience and increase market share.
“Although first-half revenues are down relative to 2012, we expect strong equipment deliveries and continued growth in product support in the second half of the year that should allow us to modestly increase annual revenues relative to 2012, albeit to the very low end of the previously disclosed 0- to 10-percent range. I am encouraged that there are significant opportunities to increase profitability, particularly in Canada. However, improvements will take time and I am not expecting Canada’s profitability to improve in the second half of the year given a projected decrease in our inventories.”
Thomson said as the company goes through the remainder of the year, it will have a better sense of 2014 activity. “But we are encouraged by the order intake in Q2, which was higher in all of our regions relative to Q1, driven primarily by the non-mining market segments.”
In Canada, revenues declined 19 percent compared to Q212, because of a 43-percent decline in new equipment sales, reflecting reduced demand for equipment from mining customers, including oil sands operations. Product support revenues rose 5 percent driven by an increase of about $39 million from the expanded mining product line acquired in 2012.
Finning International is based in Vancouver, B.C., Canada. Its Canadian Cat Rental Store division, headquartered in Edmonton, Alberta, is No. 10 on the RER 100.
