Canada-based Caterpillar dealer Finning International has seen its rental revenues continue to recover sequentially in the third quarter of 2020, though they remain below prior year levels.
Rental revenues in the third quarter came to CA$53 million, which is up 29% from the CA$41 million recorded in the second quarter of the year, but down 25% on the third quarter of 2019.
Gross capital expenditure on rental fleet in the third quarter of 2020 came to CA$26 million, significantly lower than the CA$54 million spent in the equivalent period of 2019.
Net revenues for the company came to CA$1.4 billion in the third quarter, down 21% compared to the equivalent period in 2019. However, it was an 8% improvement on the second quarter of 2020, driven by the recovering market in UK and Ireland, and modest market improvements in Canada and South America, according to Finning.
EBITDA (earnings before interest, taxes, depreciation and amortisation) was up 7% on the third quarter of 2019, reaching CA$215 million.
Finning said it is on track to deliver annual cost savings of more than CA$100 million, due to global productivity initiatives and tight cost control.
In Finning’s home market of Canada, a reduced cost structure drove improved profitability from the second quarter of 2020 in what the company described as a slow recovery environment.
Net revenues in Canada were down 26% on the previous year, and rental revenues were down 24%. However, compared to the previous quarter, there was a rebound in rental activity that led to a 40% increase in rental revenues.
In the UK and Ireland, rental revenues were on a par with Q3 2019, at CA$8 million
Looking ahead to the full year, a continued recovery in machine utilisation and rental is expected to drive improved demand for product support and rentals in Canada. Large infrastructure programmes are planned in Alberta, British Columbia and Saskatchewan.
Scott Thomson, President and CEO of Finning International, said, “Our strong results in the third quarter are a reflection of how we have delivered on the commitments we set out at the beginning of the year to improve execution in South America, lower our cost base in Canada, position the UK for High Speed Rail 2 opportunities, and reduce our finance costs.”
“We saw some sequential end market improvements in Q3 2020, particularly in rental and product support activity as customers resumed work and machine utilisation hours increased.
Thomson is expecting continued improvements in market conditions in the fourth quarter of 2020 and into 2021; “Going forward, we are focused on growing product support revenue through the market recovery by strengthening relationships with customers and leveraging technology.”
He added, “Our overall outlook for the balance of 2020 and into 2021 remains positive.”