04.11.2015

Decline continues at Mills

Brazilian rental company Mills has published its third quarter results, with another substantial fall in revenues and profits.

Total revenues for the Rental division - which is largely made up of powered access equipment and telehandlers –for the nine months to the end of September was Rs222.8 million ($58.5 million), down 20 percent on the same period last year. Pre-tax profits for the period were Rs12.2 million ($3.2 million) just a sixth of last year’s number.

Looking at the third quarter, revenues were down 25 percent to Rs 68.7 million ($18 million) while last year’s profit of Rs20.2 million ($5.3 million) was turned into a loss this year of Rs 1.85 million ($486,000). Capital expenditure for the quarter was Rs 200,000 ($52,500)

In order to adjust to shrinking demand and lower rental rates the company has made significant cuts to its workforce, which resulted in non-recurring layoff costs of Rs3.1 million ($814,400) in the third quarter, but are expected to bring annual savings of Rs10 million ($2.6 million) in payroll costs alone.

Several other divisions have also been merged in order to save costs, but there are no plans to merge the Rental business.

Vertikal Comment

There is not much to say about these numbers that we have not already said in previous quarters, apart from the fact that the company is clearly working hard to adjust to a rapidly changing market.

It ought to consider itself lucky that the boom, or rather the rapid rate of growth in powered access take up – which was clearly unsustainable – did not continue any longer or this correction would have been even deeper and lasted even longer.