Finning International last week reported 2006 second-quarter revenue of $1.3 billion Canadian, an increase of 2.2 percent over the second quarter of 2005. Second-quarter net income was $56.6 million or 63 cents per share, an increase of 21.2 percent in earnings per share compared with the second quarter of 2005.
All figures are presented in Canadian dollars. The current exchange rate at press time is $1 CA = $.89173 U.S.
"Our second quarter results were once again at record levels, with our western Canadian operations leading the growth," said Doug Whitehead, president and CEO of Finning. "These results build on a very good first quarter and we expect a strong second half of the year as well."
Earnings Before Interest and Taxes for the quarter were $94.1 million, compared with $80.5 million in the second quarter of 2005, an increase of 16.9 percent.
Second-quarter EBIT in the Canadian reporting segment increased from $41.2 million in 2005 to $57.7 million in 2006, a 40 percent increase. The increase in 2006 was primarily the result of strong volumes in all lines of business.
Hewden, the company’s United Kingdom-based rental arm, reported second-quarter EBIT of $6.9 million, a 53.1-percent decrease over 2005 levels primarily due to fewer business days in the second quarter of 2006 and process reengineering and restructuring costs. Hewden's EBIT was also affected by continued competitive pressures in the U.K. marketplace and the unfavorable foreign exchange translation impact of a stronger Canadian dollar. In local currency and on a year-to-date basis, Hewden's EBIT decreased 7.9 percent.
Finning's net income for the quarter was $56.6 million compared with $45.6 million in 2005. Basic earnings per share for the quarter were 63 cents in 2006 compared with 52 cents in the second quarter of 2005. 2006 results were higher than in 2005 primarily due to a very strong quarterly performance from the company's Canadian operations and improved results from the company's U.K. operations.
Revenue for the six months ended June 30, 2006 was $2.5 billion, up 4.9 percent from the prior year. EBIT of $188.3 million and basic earnings per share of $1.27 for the first half of 2006 are up 25.6 percent and 35.1 percent respectively.
Year-to-date revenue is up 28.5 percent at the company's Canadian operations, reflecting strong equipment sales to resource-based businesses and the general construction markets. EBIT margin (EBIT divided by revenue) for the Canadian operations of 8.9 percent is up from 8 percent in the prior year reflecting higher volumes and margins from most lines of business.
Hewden's revenues decreased 12.8 percent, but in local currency revenues were only slightly lower than the same period in 2005. EBIT decreased 18.8 percent compared to the first six months of 2005, and in local currency EBIT decreased 7.9 percent. EBIT as a percentage of revenues decreased from 6.3 percent last year to 5.9 percent in 2006 partially due to lower volumes in a very competitive rental market as well as higher project costs.
In other company news, Juan Carlos Villegas, currently vice president, Power Systems of Finning (Canada) was appointed president, Finning South America effective Aug. 1, 2006. In his new role, Villegas will have overall responsibility for Finning's operations in Chile, Argentina, Bolivia and Uruguay.
Brian Bell, currently president of Finning South America, will assume the role of executive vice president, corporate strategy and customer solutions for Finning International, effective Sept. 1, 2006. In his new role, Bell will be responsible for the development of the company's corporate strategy and for enhancing the effectiveness, efficiency and profitability of Finning's growing global parts and service business.
The board of directors approved the company's quarterly dividend at 13 cents per common share, payable on Sept. 5, 2006, to shareholders of record on Aug. 22, 2006.
Edmonton, Alberta-based Finning is No. 16 on the RER 100.
