Coates Hire, Australia’s largest rental company, last week said it expected profits to be about 5 percent lower than previously-issued guidance for its fiscal year which will end June 30. Coates said demand has fallen short of expectations, particularly in its lucrative mining sector, which has affected its Allied Equipment division and its Queensland operations Coates North.
Coates managing director Malcolm Jackman said transport bottlenecks are inhibiting production growth, thus reducing demand for equipment. He added that customers’ projects were being held back by a shortage of skilled staff, particularly in the states of Victoria and New South Wales. Companies have also been affected by drought conditions in some regions.
However, Jackman said the company expected an improvement in net profit in fiscal 2008.
The company forecast net profit for the financial year of about AUD 106 million (about U.S. 90 million.)
Coates last month said that it had been approached by private equity firms and other potential buyers looking to acquire the company, which then appointed Macquarie Bank Ltd. as an advisor and said it will appoint a leading consulting firm to advise it on a strategic review process.
In August 2006, Coates reported a 54-percent jump in net profit to AU $100 million for its 2005-06 fiscal year.