19.02.2007

Hewden flat in 2006

Finning international reported its best quarter ever at the end of 2006, in terms of revenues and profits. Revenues rose by 11 percent to over C$5 billion while net income rose by almost 25 percent to C$204 million.

In the UK however slow growth plus a strengthening of the Canadian dollar against sterling caused its UK results to fall.

In sterling Hewden revenues rose by 1.3 percent to £277 million (at today’s exchange rate) compared with 2005. Finning says that the increase was primarily a result of rental asset sales.

Rental revenues fell marginally during the period
during the year, due the company says “to continued competitive pressures in the U.K. rental marketplace with limited opportunities for price realization and rental revenue growth”.

Operating income for 2006 decreased in local currency by 6.3 percent £19 million and from 7.6 percent to seven percent as a percentage of revenues. Lower rental fleet utilisation was partially offset by strong margins made on the sale of used equipment much of it through the auctions it held.

Finning expects 2007 to be better thanks it says to “a renewal of Hewden’s strategic focus and structure” which is “expected to improve operational excellence and consequently operating results”.

“Hewden’s business model is being evolved through an assessment of products, network and structure to ensure it continues to meet the needs of its customers. These activities, in conjunction with Hewden’s new information technology system which will be implemented in 2007, are expected to be key elements in meeting customers’ needs, increasing asset utilisation and reducing operating costs”.

The company also said that it expects the changes in its crane hire strategy- “may result in a short term adverse impact on revenues as resources and management are deployed in the implementation of these initiatives to generate longer term benefits.

Anticipated annualised savings from this reorganisation are $3.7 million”.

Finning UK, the UK dealer for both Caterpillar and Perkins, saw revenues rise in sterling by just one percent to £351 million, while operating income improved significantly, almost tripling to £15.4 million.