20.05.2020

Revenues and losses cut

Brazilian rental company Mills has published its first quarter results, with lower revenues but a sharp reduction in its losses.

Total revenues for the Rental division - which now makes up more than 87 percent of group revenues – were 4.4 percent down on the same period last year at R110 million ($21.5 million) with R99.9 million ($19.5 million) of that being rental – a fall of 3.3 percent, R3.8 million ($740,000) new equipment sales – up 4.6 percent and R3 million ($585,000) used equipment – down more than 20 percent. Rental utilisation edged up very slightly to 49.4 percent – 92 percent of the fleet is made up of aerial lifts – and the company says that it managed to improve rates at the same time. Capital expenditure was once again zero.

The group as a whole saw revenues decline nine percent to R126.1 million ($24.6 million) with a pre-tax loss of R800,000 ($156,000) compared to a loss in the same quarter of 2019 of R2.6 million ($507,000). Net debt at the end of the period totalled R187.6 million ?($29.2 million)

The company said: “Since the closing of the Business Combination with Solaris on May, 2019, we have unified 11 of the 17 branches planned to be unified by the end of 2020, we have integrated 100 percent of the commercial teams and processes, our people and management area, HSE and others. The adjustment of processes, infrastructure, systems and the development of a new organisational culture are in progress, but their schedule was impacted by the pandemic as well.”

Vertikal Comment

The addition of the Solaris business has certainly helped Mills, and it does appeared to have stabilised before the impact of Covid-19 hit Brazil, which began late compared to other countries but is now hitting the country hard.

The challenge Mills will face once normality returns is the fact that its fleet profile is already old, compounded by the fact that it built it up very rapidly and does not have a good age spread. How it will cope when issues and maintenance costs start to mount will be interesting. It will be vulnerable to regional operations with younger equipment. Mills started spending like there was no tomorrow in 2009/2010 as it built up a massive aerial lift fleet. Then in 2014 it began to come apart. The average age of its fleet must be in the region or six to seven years old, updating it will be a real challenge.