Positive start for Mills
By Euan Youdale11 May 2018
Mills Estruturase Serviços de Engenharia has recorded its best financial results in more than a year.
The Brazil-based company’s net revenue reached R$79 million in the first quarter of its 2018 financial year, 9% higher than the previous quarter and up 19.5% on the first quarter of 2017. EBITA was also favourable, standing at R$8.2 million and 141% above the same period last year. This helped the company attain its best figures since the third quarter of 2016.
Mills said the figures proved its strategy to overhaul the Rental segment and downsize the Construction business unit, due to the continued low level of heavy construction activity in Brazil, had been the correct one.
During the first quarter, Mills increased prices in both business units and improved penetration in Rental, as well closing four Construction warehouses. Nevertheless, the company maintained its presence countrywide.
Equipment rental revenue was responsible for 77.9% of the total, with a growth of 6.1% compared to the previous quarter. In the Rental unit, equipment rental revenue showed an increase of 5%, thanks to an increase in average rental rates and despite a drop in the utilization rate.
In the Construction business unit, total net revenue was 22.7% higher than the previous quarter, leveraged mainly by the sale of used equipment, which was 154.4% higher than in the fourth quarter last year. In both business units, the lower rental volume was compensated by the price increase.
During the first quarter of 2018, sold 58 telehandlers, valued at R$2.5million, as part of its strategy to stop providing this type of equipment.
The company invested R$1.4million in the first quarter, of which 87% was on new rental assets, with the outstanding 13% spent on operational and support services. This resulted in a changed fleet mix, with the replacement of some large low-utilization MEWPs with small electric scissors aimed at non-construction application, for example retail.
Non-recurring expenses totalled R$7.9million in the first quarter, driven, specially by the scrap sale of Construction business unit equipment. It is part of the resizing of the Construction segment, including the closure of the warehouses and a 40% reduction of its assets, meaning the segment is now 100% of focused on real estate.