14.11.2017

A more positive quarter for Mills

Brazilian contractor and rental company Mills has reported a stronger third quarter for its access rental division, in terms of revenues and reduced losses.

In the nine months to the end of September, revenues were almost 25 percent lower at R131.3 million ($40 million) while pre-tax losses more than doubled to R35.25 million ($8.2 million).

Moving on to the third quarter, revenues were 11 percent higher at R48.2 million ($14.7 million), with utilisation edging up to 57 percent, however the higher volume of machines on rent was offset by lower prices and weaker product mix. The reason for the positive upturn in revenues is due to the sale of 118 used aerial lifts in the quarter for R8.9 million ($2.7 million). The company says that it has also signed a deal to sell a further 60 aerial platforms for $1.4 million, for delivery in the fourth quarter.

The company has also eased up on its capital expenditure freeze, up from zero last year to R4.7 million ($1.4 million) this year. The pre-tax losses were reduced from R10.4 million ($3.3 million) to R8.8 million ($2.7 million).

Overall group revenues for the nine months declined almost 33 percent to R218.9 million ($66.6 million), at the same time last year’s pre-tax loss of R143.5 million ($43.7 million) to R32.8 million ($10 million).

In a statement regarding the sale of used machines from the Rental division, the company said: “We seized this commercial opportunity to sell equipment with more than seven years of usage and a lower utilisation rate to equalise the fleet to the actual size of the market.”

Vertikal Comment

While the improvement is due to sales from the rental fleet, utilisation did show a solid improvement in the quarter and it does seem as though the long decline might be coming to an end.

The problem is that while the fleet is now reaching levels that the market will support and that match the longer term development level of the market, the fleet is now beginning to look a little ‘long in the tooth’. This leaves the door open for another company to come in with a younger fleet as the overall market and economy picks up.

All this results from a gross over expansion, as the company followed a market bubble, ignoring underlying demand and overall market uptake of what was a new concept. Fortunately Mills has survived, and with a fair wind behind it, will remain a major player in the Brazilian aerial lift rental market which will eventually reach levels substantially higher than the peaks seen before the crash.