Caterpillar dealer Finning posted CDN $1.845 billion in the second quarter of 2021, compared to $1.419 billion in the second quarter of 2020, a 30-percent increase. The second quarter of 2020 was heavily impacted by the shutdown of activity caused by the COVID-19 pandemic. All regions performed well in Q221, demonstrating operating leverage in a recovering market. EBIT as a percentage of net revenue was 9.3 percent in Canada, 9.8 percent in South America, and 5.3 percent in the United Kingdom and Ireland, an improvement in profitability levels for all regions.
Consolidated equipment backlog on June 30, 2021, increased to $1.4 billion from $1.2 billion on March 31, 2021, with order intake in Canada and South America outpacing deliveries in the second quarter.
Net revenue in Canada increased by 25 percent year over year, driven by strong demand for new construction equipment in a recovering market and higher product support activity. Net revenues were still 18 percent below the second quarter of 2019, with lower revenues in all lines of business, with the exception of used equipment sales.
Product support revenue leaped 18 percent year over year, and compared to the first quarter of 2021, product support was up 4 percent driven by improved demand in all sectors and growth in construction rebuilds. The company added 30 technicians during the quarter to its response, repair and rebuild locations.
In South America, net revenue hiked 23 percent compared to the second quarter of 2020, and was up sequentially 9 percent from Q121. New construction sales jumped 48 percent year over year and 14 percent sequentially, with a backlog building in mining and construction. Product support revenue increased by 16 percent year over year and 8 percent sequentially.
In the U.K. and Ireland net revenue nearly doubled year over year and jumped about 50 percent from the first quarter.
“We are pleased with our strong execution and results in the second quarter,” said Scott Thomson, president and CEO of Finning International. “With a reduced cost base and more efficient operations and supply chain, we are confident in our improved earnings capacity, which puts us firmly on track to achieve the mid-cycle targets we set out during our Investor Day in June. Our outlook remains positive as the global economy recovers in 2021 and beyond. We are excited about the next phase of growth and our earnings potential as we continue to execute on our strategic plan to accelerate product support revenue growth, further reduce costs, and re-invest free cash flow to compound our earnings.”
ln Western Canada, Finning operates in British Columbia, Yukon, Alberta, Saskatchewan, the Northwest Territories and part of Nunavut, with regional head office in Edmonton, Alberta. In South America, Finning operates in Argentina, Bolivia and Chile with regional headquarters in Santiago, Chile. In the U.K. and Ireland, Finning’s regional head office is in Cannock, U.K.
A major rental player, Finning is No. 20 on the RER 100.