Brazil’s largest rental company, Mills Estruturas e Servicos de Engenharia said it has revised upward its 2011 capex budget for its rental division – which focuses on rental and sales of motorized aerial equipment – to R$ 161.3 million (about U.S. $101.5 million), an increase of 25.1 percent from previously announced total of R$128.9 million. The company said strong market demand and the successful implementation of new branches led to its larger capex expenditures.
The rental division began its geographic expansion plan in January 2010, at which time it had only four branches located in southeast Brazil. Since then it has opened 10 branches in the southeast, south, north and northeast regions. Aggregate revenues of the new locations contributed 48 percent of the rental division’s total revenue in the first quarter of 2011. The company also opened five additional branches in 2011, with three new branches in the state of Maranhao and two more in the state of Rio de Janeiro.
The additional capex will be dedicated to the purchase of new equipment, mainly to supply new branches. Demand for motorized aerial equipment remains strong, the company said, and its utilization rate remains higher than its normal rate of 75 percent.
The revised capex for 2011 is part of the company’s plan to invest R$1.1 billion (about U.S. $693 million) during the 2010-2012 period. The company believes that cash from operations and recent debenture emissions totaling R$270 million will be sufficient to finance Mills’ forecasted investments for 2011.