Wajax Revenue Drops 6 Percent in Q1 on Weaker Mining and Oil-and-Gas Revenues
Wajax posted a 6-percent decrease in first-quarter revenue, dropping to CDN $336.3 million (about U.S. $330.6 million). Wajax Equipment revenue dropped 2 percent. Lower mining equipment sales more than offset gains in equipment sales in the construction, forestry and material handling sectors and a 12-percent increase in parts and service volumes. Wajax Power Systems and Wajax Industrial Components recorded decreases of 17 percent and 4 percent respectively, primarily on weaker activity in the oil and gas sector in western Canada.
Net earnings for the quarter decreased from $17.1 million a year ago to $10.4 million in the first quarter this year, a 39.2-percent plunge. The drop also was primarily driven by a reduction in earnings in the oil and gas and mining sectors, with $4 million attributable to the loss of the LeTourneau mining equipment line.
“First-quarter earnings were moderately less than our expectations and lower than last year due to continued weakness in the oil and gas market and a decline in mining,” said Mark Foote, president and CEO. “We expect the weakness in the oil and gas market that began in the third quarter of 2012 to continue for the balance of 2013, with demand for new equipment and aftermarket services for drilling and well stimulation continuing to be soft. In mining, quoting activity remains reasonably strong the Equipment segment as well as Power Systems’ electrical power generation business. However, project delays and reductions in capital and development spending have limited the ability of many of our customers to commit to new equipment orders.
“We are very confident in our opportunities for growth and remain well-positioned in the mining and oil gas sectors as conditions improve. Other core markets such as construction, material handling and forestry have shown year-over-year improvement and our strategic initiatives continue to gain traction. We are focused on investing in these initiatives while taking prudent actions with respect to costs, inventory and working capital to manage our business in 2013.”
Also a major player in the rental market, Wajax Corp., based in Mississauga, Ont., Canada is No. 50 on the new RER 100.