RERMAG

Finning Posts Expected Revenue Declines in 2009

Finning International reported fourth-quarter results including revenues of CA$1.1 billion (about U.S. $1.043 billion), EBIT of CA$30 million and diluted earnings per share of CA$0.10. For the full-year 2009, Finning posted total revenues of CA$4.7 billion (about U.S. $4.456 billion), EBIT of CA$207 million, and diluted EPS of $0.77, compared with total revenue of CA$5.991 billion in 2008.

New and used equipment sales and rental revenues declined compared with 2008 levels in all operations, although product support revenues were comparable to 2008 levels, with strong parts and services revenue growth in the mining sector.

Net income was CA$130.8 million (about U.S. $124 million), compared with net income of CA$96 million in 2008.

“The quarterly results were consistent with expectations,” said Mike Waites, president and CEO of Finning International. “Free cash flow continued to be very strong and totaled $494 million for the year. We are well on our way to our cost reduction goal of over $200 million, and combined, these accomplishments give us a great deal of flexibility and position us well for growth. Importantly, we are seeing signs of a recovery, led by mining. Quoting activity is strong, notably in South America, and our backlog has posted the first increase since 2008. More recently, we were very pleased to have secured the Kearl mining contract in Canada and the letter of intent from Codelco’s Ministro Hales project in Chile, under which equipment deliveries will commence in 2011.”

Equipment rental volume, on a worldwide basis, was CA$119.8 million for the fourth quarter (about U.S. $113.6 million), a 31-percent decline compared with CA$172.6 million for the fourth quarter of 2008. For the full year, on a worldwide basis, the company posted CA$510.4 million (about U.S. $484 million), a 28-percent decrease compared with 2008 when the company posted CA$712.8 million.

Overall revenues from Finning’s Canadian operations dropped 25.8 percent compared with 2008 when the company posted record revenues, with lower new equipment sales a major factor. Product support revenues from Canadian operations only decreased 4.7 percent year over year, with product support from the mining sector increasing 30.2 percent compared with 2008. The company’s South American operations posted record new equipment sales to the mining sector in 2009.

Equipment rental revenues for Finning’s Canadian operations were CA $224.4 (about U.S. $212.8 million) compared with CA$296.6 million in 2008, a 24.3-percent decrease.

Overall, Finning expects revenues to decrease slightly in 2010 compared with 2009, with lower new equipment sales partly offset by slightly higher product support revenues. SG&A expenses will continue to decrease, although at a slower pace than in 2009, officials said, with a modest improvement in EBIT likely in 2010.

Based in Vancouver, B.C., Canada, Finning International is the world’s largest Caterpillar dealer with operations in western Canada, the U.K., Argentina, Chile, Uruguay and Bolivia. It is also one of the world’s largest rental companies and is No. 11 on the RER 100.

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