14.11.2005

Finning hits new record

Fining International the Canadian based parent of Hewden and Finning UK, the UK distributor for Caterpillar, has achieved record nine months results with revenues of C$3.6 Billion ($3.1/£1.8 billion) an increase of 18.3 percent over 2004.

Earnings before Interest and Tax rose nine percent to C$224 million ($193/109 million) while net income jumped by 34 percent to C$128 million ($110/£62 million).

In the UK Hewden, Europe’s largest rental company, saw revenues in local currency rise by 5.3 percent in the quarter and 4.6 percent year to date giving total revenue for the nine months of £247 million. Finning does not break out divisional profits at the interim stage.

The company says that “price competitiveness in the U.K. rental market continued in the third quarter of 2005. but that rental margins showed a modest improvement with an increase in volumes which improves margins due to the relatively fixed costs associated with the rental business”.

Finning UK saw revenues increase by 9.4 percent to £416 million, with the new Diperk , Perkins engine distribution business contributing in the last quarter. Material handling though, including the Lex Harvey acquisition had a tough period, offset by construction and power equipment.

Gross profit at Finning UK, was lower in both absolute terms and as a percentage of revenue, primarily due to lower rental fleet revenues from the Materials Handling business and lower margins achieved by the new Diperk business.

In the construction equipment business, margins edged up and Finning (UK) is working with Caterpillar to improve market share.

An interesting note included in the third quarter accounts said:
“On October 27, Caterpillar announced that it had signed an agreement to enter into a global alliance with JLG Industries, Inc. to produce a full line up of Caterpillar branded telehandler products which will be available late 2006. This will provide Caterpillar dealers and customers with greater access to a quality range of such products which are integral to the U.K. marketplace. This announcement by Caterpillar is part of the implementation of the market plan that Finning and Caterpillar have developed for the U.K. market, a result of an intensive process that Finning has undertaken with Caterpillar to get a more competitive product line in the U.K.”

It continues: “In addition to the telehandler changes, Caterpillar has also implemented selected price changes on certain other equipment lines in order to make these products more competitive in the market. Increased market coverage, service enhancements, and targeted offerings also form part of the U.K. market plan”.