A challenging first quarter for Canada-based Caterpillar dealer Finning International saw a 21% year-on-year drop in rental revenues to CA$56 million (€38 million).
However, used equipment sales increase 45% compared to the first three months of 2015 to CA$98 million (€66 million).
Total revenues, including sales of new equipment and revenues from product support, stood at CA$1.49 billion (€1 billion) for the first quarter, down 3% year-on-year. Overall, net income dropped 72% year-on-year to CA$15 million (€10.2 million).
Finning said the increased in used equipment revenues reflected the company’s efforts to sell used equipment inventory in response to weak rental market conditions.
These market conditions drove the decrease in rental revenues, while increased competition its Canadian operations further impacted the rental figure.
Rental revenue in South America and the UK & Ireland was largely unchanged in the first quarter of 2016 compared to the prior year period, according to Finning.
Finning added that its global workforce had been reduced by 435 people year to date in response to difficult market conditions.
President and CEO Scott Thomson said the results were in-line with the company’s expectations as it continued to realise permanent cost savings and implement sustainable operating improvements.
“Our Canadian operations delivered stronger revenues driven by equipment and parts sales. Margins were lower as expected due to large equipment deliveries and workforce reductions which occurred at the end of the quarter.
“Our South American team continued to successfully manage through challenging market conditions by focussing on cost control and maintaining profitability despite lower product support volumes.
"In the UK and Ireland, our new management team is executing with urgency to return our UK operations to historic profitability levels by the end of the year with a focus on lowering our cost to serve.”