11.11.2009

Mixed messages at Hewden

Finning International the CAT dealer and owner of Hewden the UK crane, access and telehandler rental company has published its nine month results.

Hewden, which is part of Finning UK, saw revenues for the quarter decline 35 percent to C$59.5 million (£35 million). Although n local currency the fall was under 30 percent.

Hewden posted an operating loss for the period of C$6.2 million (£3.6 million) although this was offset by a C$4.0 (£2.3 million) one-off gain on property sales. In spite of these further declines, Finning says that renal utilisation has picked up and that the long term prospects for the business are improving.

Nine month year to date revenues for Hewden were c$177.7 million (£104 million) a fall of 37 percent, although in local currency the drop was just 29.3 percent. However Hewden posted an operating loss for the period of c$30.2 million ( £17.7 million) partially offset by a c$6.6 million (£3.8 million) gain on the sale of property.

While new sales at Finning UK were down by around 40 percent, the business did manage a quarterly and year to date profit, that offset some of the losses incurred at Hewden. Although the UK group still posted operating losses for the quarter of c$1.8 million (£1.05 million) and for the nine months to date – c$16.5 million (£9.6 million).

The Finning release said: “In the UK, market conditions are expected to remain challenging. At Hewden, while a strategic review is under way, management has improved operational practices and profitability, and disposed of surplus fleet and depots. While
fleet utilisation has increased, overcapacity in the industry has put pressure on rental rates. Hewden continues to generate positive cash flow.”

“The strategic review at Hewden is progressing according to plan. Further actions are expected to be taken as needed to respond to market conditions.”

Vertikal Comment

It is refreshing to read a set of results from Finning where the dialogue does not whinge on about Hewden and announce further restructuring before a previous one has been given a chance.

This in spite of substantial losses from the rental business, due to heavy restructuring costs and a challenging market.

Kevin Parkes has now been made director of Hewden and is passionate about turning the business around and seems to have the support of both the group and the management team.

While Finning is likely to complete its strategic review of Hewden by year end it really has just two choices -Either give Parkes enough time to implement the current strategy and prepare the business for the gradual upturn that is expected to kick in during 2010.

Or cut a deal and sell the business for what it can get – accepting that it is unlikely to obtain even a half decent price at this point in the economic cycle.