01.08.2010

Essex continues to decline but sees light

Essex Crane rental has reported further revenue declines and losses in the first half but is seeing an improvement in trading.

First half revenues were down almost 56 percent to $17.4 million with both rental and used sales falling significantly. The lower volume resulted in a pre-tax loss of $6.5 million compared to a profit in the same period last year of $4.1 million.

The second quarter was slightly better with revenues down 38 percent to $9 million, with a pre-tax loss of $1.7 million compared to a profit of $2.5 million in 2009.

Physical crane utilisation for the second quarter was 35.1 percent, compared to 43.9 percent in the same period last year. However the company says that it has posted five consecutive months of increasing utilisation – utilisation at the end of the first quarter was just 30 percent.

Essex chief executive Ron Schad said: "We are continuing to focus on managing our costs after experiencing the impacts of the worst construction recession in recent history. Although second quarter 2010 results are down compared to 2009, we are beginning to see signs of recovery from the recession and a very soft construction cycle.”

“Business is trending upwards, and we expect to generate improved operating results during the second half of 2010 as compared to the first six months of this year. Longer term, we believe that the investments we have made in our fleet during 2009 and the beginning of 2010 position us to surpass historic high profitability marks when the construction market recovers."

" Infrastructure related projects, including levee reconstruction, continue to be the largest contributor to increasing utilisation, but we have seen small increases in almost all markets in which we operate. We believe that wind power projects will provide good opportunities for growth in the future, but we don't believe that we will see significant increases to business levels in this niche market until 2011."

"In the short-term, our business is benefiting from the early stages of a recovery and we believe that we have weathered the worst of the challenges that this recent downturn presented. As we have said in the past, operating results will not return to historical levels until utilisation rates significantly increase, enabling rental rates to rise. We remain confident in the long-term growth of the infrastructure and energy markets in which we operate, and believe that there will be significant demand for our assets for many years to come.”

“Our assets have retained their value well. We continue to sell our lower utilised units, for amounts in excess of 120 percent of orderly liquidation value, we are focusing on maintaining the quality of our fleet, and our capital structure and liquidity are sound, as evidenced by more than $39 million of available borrowing capacity under our revolving credit facility. We will continue to focus on cash flow management and opportunities to strengthen our earning potential, while maintaining a prudent management posture through a still challenging, but improving, business climate."