Canadian Distributor Strongco Flat in Fourth Quarter
Canadian distributor Strongco posted CDN $128.2 million (about U.S. $96.6 million) in revenue in the fourth quarter of 2015, flat compared to $128.8 million in the fourth quarter of 2014. Overall equipment sales were up slightly compared to the previous year while rental and product support revenues declined slightly. Strongco’s overall gross profit was $18 million or 14 percent of revenues, compared to $21.5 million or 16.7 percent of revenues in the year-ago quarter.
For the full year, revenues were $474.3 million, down from $498.3 million in 2014, a 4.8-percent slide, mostly of weak economic conditions in Alberta, where most of the decline occurred. The Alberta slump was partially offset by strong growth in Strongco’s United States operations.
“Over the past several years, Strongco has invested heavily in new branches, technology, and product lines,” said Robert Beutel, executive chairman of Strongco. “However, difficult market conditions, particularly in resources and energy, along with a weak Canadian dollar, led to disappointing results for the year. We believe, however, that with focus on our talents and streamlining our operations, we can return to levels of stability and financial strength in the near and long term.”
Strongco management expects continuing challenges in the Canadian markets in 2016, particularly in Alberta and Quebec, while New England should do well with heavy equipment. With no recovery foreseen in the price of oil, Strongco expects Alberta to remain uncertain, with weak demand for cranes and heavy equipment. Management has made adjustments to the cost structure with layoffs and other cost reductions.
Demand remains soft in Quebec. Beyond a couple of large projects in the Montreal area, the province is expected to remain soft. Construction is more buoyant in Ontario, but most activity is of a small scale, the company said. Low oil prices and the weak Canadian dollar could benefit Ontario’s manufacturing sector. With the majority of heavy equipment priced in U.S. dollars, the cost of new equipment remains challenging to Canadian dealers, and it is more difficult to pass along these costs.
Strongco represents brands such as Volvo Construction Equipment, Case Construction, Manitowoc Cranes, Terex Trucks, Konecranes and others. Based in Mississauga, Ontario, Strongco is No. 72 on the RER 100.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.