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News » Canada » Finning reports higher revenue and profits » published 8 Feb 2018

Finning reports higher revenue and profits

Vancouver-based Finning - the world’s largest Caterpillar dealer - has report a significant increase in its return on capital invested, driven by higher earnings and improved capital efficiency across all regions.

The company published its fourth quarter and annual 2017 results. Revenue in Q4 2017 was up 16% from Q4 2016, with increases in all regions, lines of business, and key market segments. New equipment sales increased by 27%, driven primarily by improved activity in the construction and power systems markets. Product support revenue grew by 10%, and was higher in all regions and market segments.

Gross profit rose by 15% over Q4 2016. The gross profit margin of 25.1% was slightly below gross profit margin of 25.4% in Q4 2016 due to a shift in revenue mix to new equipment sales.

The figure for adjusted earnings before interest and tax (EBIT) was up 58% from Q4 2016 to CA$113m on a 16% increase in revenue.

“In 2017, we delivered significantly improved financial performance, driven by strong operating leverage and capital discipline,” said Finning president and CEO Scott Thomson. “I am pleased with our ability to control costs and improve working capital efficiencies as we continue to capitalize on strengthening market activity and support our customers in a highly competitive environment. The operational improvements implemented across the organization combined with the strong execution of our strategic priorities have enabled us to generate significantly higher return on invested capital and solid free cash flow in 2017.”

He added: “Looking ahead, we expect current momentum in market activity to continue into 2018. We are focused on generating earnings leverage while investing in growth opportunities and long-term strategic initiatives to enhance our customer’s experience. Continued progress on optimizing our global supply chain is expected to drive further working capital efficiencies and support positive annual free cash flow in 2018. We remain committed to improving our return on invested capital.”

In Q4 2017, Canadian revenues increased by 19%, with higher revenues in all lines of business. New equipment sales were up 32%, driven by improved activity in the construction and power systems markets. Product support revenues grew by 12%, with stronger parts volumes in the construction sectors and increased component rebuild activity in mining. Used and rental equipment revenues were up 31% and 14%, respectively, reflecting stronger activity in the general construction markets and the integrated go-to-market offerings of new, used, and rental equipment. Adjusted EBIT increased by 45% to CA$65m.

In South America, revenues were up 10% and adjusted EBIT increased by 41% to CA$52m on stronger revenues and tight cost control.

In the UK and Ireland, revenues increased by 22%. A new equipment sales increase of 31% was driven by robust activity in the general construction and electric power generation markets. Product support revenues increased by 6% on higher parts sales in construction, marine, and electric power segments. EBIT was CA$12m and the EBIT margin was 4.0%, up from Q4 2016 EBIT of CA$8m and EBIT margin of 3.3%, due to a higher gross profit margin and cost control.

 

MPU

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This article was published on 8 Feb 2018 (last updated on 8 Feb 2018).

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