Emeco to sell Victoria civil rentals business
By Murray Pollok23 August 2010
Australian heavy equipment rental company Emeco is to sell its civil construction rental business in Victoria and will concentrate on serving mining customers worldwide.
The sale of the Victoria rental business follows the earlier closure of its European operation and the slimming down of its North American business to concentrate on the Tar sands projects in Canada. The announcement follows the completion of a six month strategic review.
Emeco said the divestment and a restructuring of its Australian sales and parts business to align with its mining activities will result in goodwill impairment charges of A$37 million (€26 million) and an additional A$6 million (€4.2 million) restructuring charge. This comes on top of A$30 million (€21 million) costs associated with the closures and rationalisation of the European and US businesses.
Emeco's chief executive officer, Keith Gordon, said; "The completion of the strategic review has enabled us to refocus the business on the core mining markets and customers in Australia, Indonesia and Canada where the outlook for bulk commodities, gold and oil sands is robust.
"We could not see a path to acceptable returns for some of our businesses due to either soft market fundamentals or changing market structures. For this reason, in addition to previously announced rationalisation of our businesses in USA and Europe, we intend to divest our Victorian Rental business."
Mr Gordon said these measures would "liberate capital of approximately A$60 million [€42.00 million] in FY2011...The capital employed in underperforming businesses has been a significant drain on the overall performance of the Group in recent years and we will now be able to move forward without this impediment."