Emeco Posts 13.1-Percent FY11 Revenue Hike; Canada Revenue Up 71.7 Percent

Australia-based heavy equipment rental specialist Emeco Equipment posted fiscal-year 2011 revenue of AU$502.5 million (about U.S. $525.5 million), a 13.1-percent increase compared with fiscal-year 2010 revenue of AU$ 444.4 million. EBITDA jumped 17.3 percent, from AU$190.4 million in FY10 to $223.3 million in the recently concluded year. Operating net profit after taxes was AU$56 million, which was in line with previously stated guidance.

Growth was largely attributed to a full year of high utilization in Australia and Canada, where the company operates in the oil sands mining region in Alberta. The company also posted increases in maintenance services, improved pricing and the deployment of growth capital. Revenues from the sales and parts businesses were flat as inventories were downsized and repositioned to align with the mining rental fleet.

“We have witnessed continued growth in activity across the resources sector globally, which has translated into strong demand for Emeco’s equipment rental and maintenance services,” said Emeco managing director Keith Gordon. “We achieved very high utilization across all our businesses in the first half, with global utilization remaining strong in the second half albeit marginally lower than the first half due to specific factors in Canada and Indonesia. However, underlying fundamentals remain strong with global utilization increasing to 83 percent since the start of FY12.

“The primary objective of FY11 was to refocus our business on renting large mobile gear to the mining industry, because that is where we can earn the best returns for our shareholders. Our businesses are now all located in growing mining markets and we believe we can further enhance returns by improving the efficiency with which we meet the needs of our customers.”

Emeco Canada’s performance improved markedly in FY11 following the reconfiguration of Emeco’s fleet towards large mining equipment suitable for mine production and reclamation work in the oil sands region. The new fleet mix and the continued ramp-up in activity in the Canadian oil sands contributed to improved utilization levels, averaging 77.6 percent, compared to 56.9 percent in FY10. Revenue and EBIT jumped 71.7 percent and 348 percent respectively to $64.9 million and $14 million.

The outlook for activity in the oil sands in FY12 remains positive, the company said. Emeco recently committed $72 million in fleet investment in Canada.

Emeco Australia’s revenue jumped 30.4 percent to AU$327.2 million in FY11, with maintenance services revenues increasing from $39.5 million in FY10 to $50.5 million in FY11.

Gordon added the company expects further growth in earthmoving volumes in FY12. “In the year ahead we will focus on the timely deployment of the new fleet into long-term projects to support continued high fleet utilization in FY12,” he said. “In addition to the organic growth opportunities in our existing markets, we are continuing to explore other ways to grow the business, either through geographic expansion or acquisition.”

Emeco is based in Perth, Australia, with North American headquarters in Edmonton, Alberta, Canada. Emeco North America is No. 85 on the RER 100.

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