07.05.2014

Larger loss on higher sales at Strongco

Canadian equipment distributor Strongco has reported higher sales in the first quarter but also a greater loss.

Total revenues for the period were up seven percent to $104.4 million, while the pre-tax loss increased from $3 to $4 million. Higher reserves against inventory reduction sell offs at auction and the higher cost of new depots opened last year are blamed for the increased loss. Equipment inventory was reduced from $264.7 million last year to $245.5 million this year.

Chief executive Bob Dryburgh said: “Despite the worst winter in decades – which persisted across all of the regions in which we operate – we were pleased to achieve an overall improvement in sales across all areas of the business, extending our record of solid revenue growth through market share gains. As anticipated and in line with expectations, costs related to our branch investments and the upgraded sales organisation contributed to higher expense levels. We are confident that the new branches and enhanced organisation will contribute to improved earnings as the year progresses.”

“Despite the prolonged winter, our branches are reporting a much improved level of sales enquiries, consistent with the feedback we received from customers during the construction equipment show held in Las Vegas in early March. Although the new facilities and additional people have added to our cost structure, we expect these investments to result in continued revenue growth and improved market share performance in 2014, which in turn should lead to – despite the expected flat overall market – growth in bottom-line profitability."