08.11.2018

Mills close to stability

The Rental division of Brazil’s Mills has reported a marginal improvement in third quarter revenues.

Looking first of all at the nine months to the end of September, total revenues were R151.3 million ($40.5 million) up just over 15 percent on the restated numbers for the same period last year. This is in spite of a slowly declining utilisation rate, on a shrinking fleet – utilisation has fallen from 53 percent in the first quarter to 50.6 percent for the third quarter, up from 50.5 percent in the second quarter. Pre-tax losses for the period were R10.3 million ($2.8 million), less than half last year’s loss of R24.2 million ($6.5 million).

The net book value of the assets declined from R620.7 ($166.3 million) to R450.3 million ($120.7 million) with the fleet now approaching an average age of six years. However the company has made no capital expenditure this year, and states that it is unlikely to do so over the next two years.

Looking at the third quarter, total revenues were 2.9 percent higher than for the same period last year at R49.6 million ($13.3 million), while losses were cut from R6.2 million ($1.7 million) last year to R1.57 million ($420,700) this year.

The proposed acquisition of a controlling interest in access rental company Solaris is currently going through due diligence and still likely to occur. See Brazil’s Mills and Solaris to merge?

The Mills group in total reported year to date revenues of R233.7 million ($62.6 million), very marginally up on the same period last year, while pre-tax losses were reduced from R143.5 million ($38.5 million) last year to R106.7 million ($28.6 million) this year.

Vertikal Comment

Mills is edging very slowly closer to exiting the mess created by its extreme over expansion between 2010 and 2014 which grossly outpaced underlying market demand. The merger with Solaris could help the business establish a base from which to return to profitability and perhaps even growth. However given other issues facing the Mills group, perhaps a sale of the combined business to a third party might be the best bet. Any outside investors will of course want to see how the new president works out and what effect he may have on the economy and business.

An interesting one to watch.