Vancouver's Finning International Inc. (TSX:FTT) reported a 36.4% drop in net income and a 4.6% drop in first-quarter revenue for the period ending March 31, 2009.
Net income for the world's largest Caterpillar equipment dealer fell to $45 million from $70.8 million on revenue of $1.36 billion, down from revenue of $1.43 billion in the first quarter of 2008.
Declines in mobile equipment and rentals contributed to the decline, but were offset by higher customer support services revenue. Revenue from Finnings' Canadian operations fell 10.1% in the first quarter and 19.6% in the U.K. The declines were slightly offset by its South American operations, which reported record first-quarter revenue driven by strong demand from mining customers.
"Equipment sales were down, as expected; however, customer support services revenue increased by 16% due to a growing installed base of machines from previous sales and as existing machines work longer," said Mike Waites, Finning's president and CEO.
Revenue from the company's customer support services division rose to $496.3 million from $427.8 million, increasing its proportion of company revenue to 36.4% from 30% a year ago.
The company said it plans to focus on generating more free cash flow this year and cut about $150 million in costs this year.
In April, Finning announced it was eliminating 170 jobs in its Canadian operations to improve profitability. The move is expected to result in a $4.5 million restructuring charge in the second quarter.
Finning's share price range during the past week: between $13.50 and $14.79; 52-week high: $30.74; 52-week low: $10.10.