Coates Hire invests big as Australia booms
By Murray Pollok29 March 2011
Coates Hire will invest as much as A$450 million (€325 million) in the current financial year on its fleet and expects spending to be at similar levels for the next two years as it seeks to exploit the buoyant construction and natural resources sectors in Australia.
The company's chief executive officer, Leigh Ainsworth, told IRN at the Conexpo exhibition that Coates was expecting to grow its revenues by as much as 60% by mid-2013 from its low point during the financial crisis.
Over the three years fleet investment could reach more than A$1.35 billion (almost €1 billion).
"There's a lot of opportunity for everybody. It's a scale of construction activity that the country hasn't seen before", said Mr Ainsworth. He said projects valued at A$60 billion were currently underway and a further A$175 billion worth of projects are approved.
"We're experiencing the best market conditions since I started in November 2008", said Mr Ainsworth, "I think we have just about hit record levels again."
The fleet investment, which will be across all product sectors, will help the company grow its business in line with demand, and will expand and refresh the fleet after several previous years of low investment during the financial crisis.
Coates Hire's revenues went down between 15 and 20% from the peak conditions, but it is now rebounding quickly and expects the 60% growth to be achieved without making significant acquisitions.
"I don't think we would get the benefit [of major acquisitions]", said Mr Ainsworth, "If we have an interest it's more in specialist businesses with expert people." Power, pumping and shoring equipment were examples mentioned by Mr Ainsworth. Another specialist sector is aerial platforms, where Coates Hire is very strong, with over 8000 units in its fleet.
The company also expects to add branches to its network, with around 10 new locations to be opened in the current financial year, several located at major natural resource sites.
One issue for the company is to get pricing back up to pre-crisis levels. Utilisation rates are good, said Mr Ainsworth, but pricing is down as much as 10-15% from peak levels, particularly in sectors such as compaction equipment and aerial platforms; "Pricing did go down, and I think it will be a hard road back."