Finning Posts 27 Percent Q3 Decline

Finning International, the world’s largest Caterpillar dealer, last week posted revenues of CA$1.1 billion for the third quarter of 2009, as well as EBITDA of CA$41 million.

Total revenues were CA$1,073 million for the third quarter (about U.S. $1,020 million), a 27-percent drop compared with CA$1,463 million for the third quarter of 2008.

In Canada, revenue decreased 35 percent year over year, primarily because of a 50-percent drop in new equipment sales. Used equipment sales plunged 38 percent and rental revenues 31 percent. SG&A costs were lower in the third quarter in absolute dollars as a result of headcount reductions, improved efficiencies and lower discretionary expenses. EBIT was CA$15 million, compared to $64 million for the third quarter of 2008.

Finning was also affected by soft demand for oil. The company is heavily invested in activity in the oil sands regions of Alberta.

“It was a tough quarter,” said Mike Waites, president and CEO of Finning International. “We have generally held, and in some cases, increased market share. Our South American operations continued to deliver strong results. However, Canada’s revenue declined in all lines of business and the UK Group experienced difficult markets. While we expect continued uncertainty, notably in the non-mining sectors, our business is strong and strategically well-positioned to take full advantage of the recovery as it occurs.”

In Finning’s South America business, revenues decreased 3 percent relative to the same quarter last year. Product support revenues remained strong and grew 7 percent in the quarter. New equipment sales dropped 14 percent year over year because of continued weakness in the construction and power systems sectors, while activity was strong in the mining sector.

Finning’s UK revenues declined 36 percent year over year, with new equipment sales plunging 42 percent and rental diving 35 percent year over year, with weak demand in construction. Finning is conducting a strategic review process of its U.K. Hewden division.

Equipment rental internationally dropped 33 percent year over year, with rental revenues of CA$125.9 million (about U.S. $119.9 million). Canadian rental revenue was CA$55.8 million (about U.S. $53.1 million) compared with CA$81.3 million for the year-ago quarter.

Finning is Caterpillar dealer (including rental services) for British Columbia, Alberta, the Yukon Territory, the Northwest Territories and part of Nunavut in Canada. In South America, Finning covers Chile, Argentina, Uruguay and Bolivia. In the U.K. it covers England, Scotland, Wales, Falkland Islands and the Channel Islands.

The company is No. 11 on the RER 100.

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