Full-year operating loss for Emeco

Australian mining equipment rental company Emeco has reported a full-year operating loss of AU$21.6 million (€15.1 million) for fiscal 2014, reversing the operating profit of AU$28.5 million (€20 million) it reported for the 12 months to 30 June, 2013.

The company, which operates in Australia, Canada and Chile, said it was hit by slowdown in utilisation and lower rental rates.

Revenues for 2014 declined to AU$241 million (€168 million) from AU$379 million (€265 million) in 2014.

Emeco said its Australian business averaged 41% utilisation across the year, down from 60% in 2013, after the country’s mining sector was hit by weak commodity prices.

In Canada, average utilisation declined to 64% in 2014 from 75% the prior year thanks to unfavourable weather conditions, an unplanned shut-down at one of its major customers and an unusually early stop to the oil sands winter works programme.

Chilean success

However, the company’s Chilean operation bucked the trend – since its establishment in 2012, Emeco said the Chilean fleet had grown to a value of AU$110 million (€76.9 million) with an average utilisation of over 80%.

“Earnings growth in full-year 2014 further supports Emeco’s decision to expand into the highly prospective Chilean copper market,” the company said.

Indeed, the Chilean business recently won a five-year contract with a Chilean mining contractor Fe Grande worth between AU$27 million (€19 million) and AU$32 million (€22 million) in revenues a year.

Emeco said the project would use up to AU$64 million (€44.6 million) of its Chilean fleet, or over 50% utilisation.

Outlook

Emeco managing director Ken Lewsey said the company was entering 2015 in a solid financial position. He said the company had conducted the most comprehensive customer survey in its history, which identified “significant value creating opportunities” for customers.

“During full-year 2015 we will continue to seek opportunities to improve utilisation of our existing fleet and divest under-performing asset classes,” Mr Lewsey said.