04.05.2004

Finning report record revenues but weaker profits

Finning International Inc, parent of UK companies, Hewden Stuart PLC, Finning UK and since June 2003, Lex Harvey; Have announced record quarterly revenues of Canadian $ 968 million (£401 million) up almost 11 percent on the same period in 2003. Net profit is down by over 30 percent for the same period, much of this is blamed on lower earnings at Hewden due to increased competitive pressures and lower earnings from Finning UK due to increased expenditure.

Group earnings before tax and interest were down by over six percent, but net income plunged by over 30 percent to C$24 million (£9.6 million). In addition to the lower UK earnings finance and interest costs doubled for the quarter from $15.1 million to C$30.1 million (£12.5 million).

The Group Results were
Revenues C$968 (£401 million)
Earnings before tax and Interest C$63 million (£26.1million)
Net Income C$24 million (£9.6 million)

Doug Whitehead, President and CEO of Finning International Inc.
said: "In the first quarter of 2004, Finning achieved the
strongest quarterly revenue in its history. Our well timed,
accretive 2003 acquisitions combined with strong commodity prices contributed to the solid quarterly performance.

Wayne Bingham, Executive Vice President and CFO of Finning noted: "Our quarterly earnings are in line with management's
expectations. We have a portfolio of operating initiatives
currently underway to provide future operating efficiencies and
improved EBIT performance."

Hewden, which includes, the UK’s second largest Crane hire company, the second largest powered access rental company and one of the top four tool hire company’s, saw revenues dip by almost two percent compared to 2003 to C$166 million (£69 million). Oerating costs rose marginally to C$122 million (£51 million) while depreciation was slightly lower, leading to earnings before interest and Tax of C$8 million (£3.3 million) compared to C$11.3 million (£4.7 million) in the first quarter of 2003. Hewden Capital expenditure for first quarter 2004 was reported as C$2.8 million (£1.1 million).

Finning also announced that Hewden is working on a number of “Initiatives to improve the service delivery channel and reduce costs” the expected savings are not yet available but initiatives that will begin in the second quarter, becoming effective by the fourth quarter include

“- A review of the service delivery network ("Customer Facing
Project"). This initiative is expected to improve revenues,
increase market share and margins, and reduce costs. Once the
review is completed, it is expected that the implementation of
this initiative will occur over a 2-year period.

- A review of business support functions is underway ("Business
Support Project"). The objective will be to align all Hewden
business units under a single back office and management
structure, eliminating duplication and thus reducing costs.

- A review of the information technology systems supporting the
entire Hewden business is underway ("IT Futures Project"). The
objective will be to bring all Hewden business units onto a
single IT platform to improve competitive and product information
as well as enhancing financial controls”.

Finning UK had revenues of C$240 million (£99.5 million) up five percent on 2003. Operating costs were much the same as last year, but depreciation nearly quadrupled, possibly reflecting the Lex Harvey forklift fleet additions?

- Finning (UK) was "Dealer Of The Year" 2003 for Mitsubishi Caterpillar Forklift Europe (MCFE). Finning Materials
Handling significantly increased its market position in June 2003
With the acquisition of the Lex Harvey business which currently
has 1,150 employees and expects to deliver 4,250 new Caterpillar lift trucks into the UK market in 2004.

- Finning (UK) is expected to complete the integration of Lex
Harvey ahead of original plan, with full branch integration by
the third quarter of 2004.