Leading Canadian construction equipment, power systems and industrial components distributor Wajax posted a 1.6-percent increase in 2014 revenues, with CAD $1,451.3 billion (about U.S. $1.136 billion), compared to $1,428.5 billion in 2013. The fourth quarter was similarly flat, with $386.1 million in revenue, compared to $391.7 million a year ago.
Wajax’s Power Systems division increased 3 percent in the fourth quarter with $88.3 million in revenue compared to $85.4 million in the fourth quarter of 2013. For the full year, the division jumped 7.1 percent from $304 million in 2013 to $325.7 million in 2014.
Wajax’s Equipment Segment revenue dropped 8 percent in the fourth quarter on reduced mining equipment and parts and service sales. For the full year the segment declined less than 1 percent, from $725.7 million in 2013 to $719.8 million in 2014.
For the full year, “Rental and other”, which is primarily rental revenue, totaled $47.4 million, a slight increase from 2013.
“Fourth quarter earnings were marginally below our expectations,” said Mark Foote, Wajax president and CEO. “Our Equipment and Industrial Components segments performed at, or better than our forecasts, however the Power Systems segment fell short of expectations where weak gross margins and higher costs resulted in a shortfall in expected earnings. Corrective cost reduction actions in Power Systems are currently underway.
“Regarding our renewed long-term strategy, Wajax’s goal is to be Canada’s leading industrial products and services provider, and our ‘4 Points of Growth’ framework provides a strong platform that will form the long-term basis for Wajax’s activities and investments to improve product and service offerings to customers. We are very confident that the direction we have set will improve the rate and durability of our growth and establish a strong and unique position in the market.”
Foote acknowledged that 2015 will present some major challenges for Wajax.
“While we are focused on the long term, we will manage carefully through what we expect will be a challenging 2015. Ongoing weakness in oil and other commodity prices is anticipated to have a negative effect on our customers in the mining, oil and gas and oil sands markets, which represented 28 percent of our total revenue in 2014. As a result, we expect that the 52 percent of revenue derived from western Canada will come under pressure in 2015.”
Foote added that the lower Canadian dollar will have a short-term effect on earnings before selling prices in affected markets are readjusted.
Headquartered in Mississauga, Ontario, Canada, Wajax Corp. is No. 46 on the RER 100.