RSC looks to second half of year for recovery
17 February 2010
RSC Equipment Rental said it expected the first half of 2010 to be challenging but that it anticipated an improvement in business conditions in the second half of the year with a recovery in industrial business leading the construction sector.
The company reported a net loss of US$29 million in the final quarter of 2009 on total revenues of $290 million, down 32% on the same quarter of 2008. Net losses for the full year were $59 million on total revenues of $1283 million, a fall of 27.3% from $1765 million in 2008.
RSC said that it reached $174 million in cost savings during the year - exceeding its goal of $150 million - and full-year cash flow was $395 million. The company reduced its debt by $397 million during 2009.
Erik Olsson, RSC's president and chief executive officer, said the company believed it was "now at or near the trough in the economic cycle. While the first half of 2010 will be challenging and a recovery in the construction segment will most likely lag an industrial recovery, economic trends including the uptick in industrial production and growth in GDP indicate that the markets served by the majority of our business are improving."
During the full year rental volume declined 23.8% and rental rates fell by 7.7%. Fleet utilisation decreased to 57.6% from 70.1% in 2008. The company opened 17 new locations and consolidated or closed 24.
Mr Olsson said that the company has maintained rental rate reductions to just under 8% for the year. He said this indicated "that we have meaningfully differentiated ourselves with our customers."
The company continues to target industrial and non-construction revenues and reported that in the fourth quarter these sectors represented 58% of its business.
Mr Olsson said RSC expected 2010 to be a year of transition; "with demand bottoming out, followed by a modest recovery in the second half. Given this outlook we expect a challenging year, but with positive year-over-year comparisons starting in the second half."