14.11.2008

Finning reports buoyant third quarter

Finning International has reported nine months revenues of c$4.4 billion a five percent increase on the same period in 2007, Net profits dropped by 2.3 percent to c$203 million, while the latest quarter saw revenue jump 10 percent to c$1.46 billion with profits up two percent to c$65 million.

Finning in the UK saw nine month revenues fall four percent to c$996 (£528 million) while operating income rose by 11 percent to c$68.3 million (£36.2 million) thanks to higher sales from customer support services and used equipment.

Business slowed in the third quarter however with a 13 percent drop in revenues to c$325 million (£172 million) while operating income dropped 22 percent to c$17.2 million (£9.1 million). Some of the drop is attributed to a larger one off sales to a mining company in the third quarter of 2007, while underlying day to day business performed better than the numbers suggest.

Finning’s rental business, mostly Hewden, saw revenues in Canadian dollars drop 16 percent to $282 million (£150 million) while the third quarter was down 17 percent to c$92 million (£49 million).

According to Finning Hewden revenues continue to be affected by lower utilisation rates, which is resulting in the business being reorganised “to improve its focus on delivering on its commitments to customers, reducing its overall cost structure, and improving the performance of its assets.”

Vertikal Comment

This is an excellent result for Finning as a whole, although even in the UK where earthmoving equipment sales have been hit in recent months, the company has done well in local currency terms.

Once again Finning condemns Hewden in its reporting and talks about further reorganisation, following what seems to be constant restructuring over the past five years. Clearly the market for much of what Hewden rents is beginning to slow down now, but what Hewden probably needs more than anything is a longer spell than a quarter to stabilise itself and rebuild its market position for what is a strong brand.

One wonders why Finning doesn’t just sell Hewden and be done with it, although it has missed the top of the market now.