International Caterpillar dealer Finning posted CDN $1.666 billion in fourth quarter revenue, compared to $1.911 million in the fourth quarter of 2019, a 12.8-percent decrease. EBITDA, however, increased from $170 million to $185 million, 8.8 percent. Free cash flow dropped from $386 million to $292 million, a 24.4 percent decline.
In Canada, net revenue decreased by 20 percent, largely because of a 47-percent dip in new equipment sales. Q4 2019 revenue benefited from large mining equipment packages that did not repeat in Q4 2020. Net revenue increased 6 percent compared to the third quarter of 2020, because of improved activity in mining and power systems deliveries.
As the economy improved, Finning purchased and made capacity expansion in its Regina, Sask., facility, made capacity expansions in Alberta, and constructed new efficient facilities in Kamloops and Campbell River, B.C., in partnerships with local indigenous communities.
In South America, net revenue decreased by 3 percent from the fourth quarter of 2019 because of the impact of COVID-19. Compared to the third quarter of 2020, net revenue increased by 6 percent, driven by product support recovery. In the United Kingdom and Ireland, net revenue was up by 4 percent from the fourth quarter of 2019, driven by an 18-percent increase in new equipment sales, attributable to deliveries of power systems projects to the data center and electricity capacity markets.
Equipment rental worldwide declined by 10.9 percent in the fourth quarter from $55 million in the third fourth quarter 2019 to $49 million in Q420. For the full year it declined from $246 million in 2019 to $196 million in 2020, a 20.3-percent slide. Total net revenue declined from $7.290 billion to $5.768 billion, a 26.4-percent dip, with a 40-percent drop in new equipment sales the hardest-hit segment.
“We navigated through a very challenging year while operating safely, supporting our customers, and executing on our strategic priorities,” said Scott Thomson, president and CEO of Finning International. “Our Total Injury Frequency rate decreased by 35 percent, and our customer loyalty scores increased by 10 percent in 2020 compared to 2019. Our employees should be proud of these accomplishments, which demonstrate continued adaptability and unwavering commitment to providing essential services to our customers.
“We greatly appreciate the contributions of our many stakeholders in 2020. The combination of employee flexibility, liquidity from our capital markets partners, and government support programs in Canada and the UK have helped protect against significant job losses while positioning our business for a strong recovery. 2020 was an exceptional execution year. Despite the challenges, we benefited from earlier investments in our digital capabilities and delivered on the commitments we set out at the beginning of the year. We improved our execution in South America, reduced our cost base in Canada, built a strong backlog of projects in the UK, and significantly lowered our finance costs.
“Our outlook for 2021 remains positive, with key markets recovering, commodity prices at constructive levels, our customers increasing capital expenditures, and government stimulus spending supporting infrastructure projects. In 2021, we expect to benefit from several profitability drivers, including operating leverage in a recovering market, product support growth in all regions, significant progress towards our mid-cycle target of 17-percent SG&A as a percentage of net revenue, and effective allocation of capital.”
Finning is Caterpillar dealer in Western Canada, the U.K., Ireland, Argentina, Bolivia and Chile.
Finning, based in Vancouver, B.C., is No. 20 on the RER 100..
