07.11.2013

Mills up 45%

The aerial lift division of Brazilian scaffold contractor Mills Estruturas e Serviços de Engenharia, has reported a 45 percent rise in nine month revenues to the end of September.

Total revenues for the division which specialises in aerial lifts and telehandlers, was R260.2 million ($113.8 million) – over 45 percent up on the same quarter last year – thanks to a larger rental fleet and more outlets.
Pre-tax profits jumped almost 38 percent to R88.6 million ($38.8 million).

Looking at the third quarter revenues climbed over 39 percent to R93.9 million ($41.1 million) with utilisation holding up in spite of substantial additions to the rental fleet and the opening of new branch in Bauru, in the state of São Paulo, making it seven new branches opened this year. However pre-tax profits for the quarter fell four percent to R60.1 million (26.3 million) – driven largely by the higher costs of new branches and additional finance. The division is still planning to open five more branches over the next two months to end the year with 29.

The parent company has posted year to date revenues of R622.2 million ($272.2 million), while pre-tax profits edged up just over nine percent to R173.8 million ($76 million)

Vertikal Comment

Yet another dazzling set of results from the Brazilian market leader, however the slight slip in profitability in the third quarter shows a more human side to what seemed relentless. Growing at this pace is enormously challenging, especially in a market where the concept and economics of powered access has to be sold first, and where logistics – in terms of good roads, not to mention practical transport distances – are not automatic.

Mills is committed to maintaining its massive investment levels in 2014, with $71 million worth of new lifts due to arrive by the end of January - and more planned during the year - bringing the total spend for 2013 to more than $109 million.

Unless access markets have fundamentally changed in the way they develop, the company needs to keep an eye out for signs of a bubble. The last time I saw a market grow at this pace for so long - seeming to defy the normal ‘saw tooth’ upward growth trend - was a five year period from around 1999. And that was in Spain...... Be warned!