Vancouver’s Finning International Inc. (TSX:FTT) reported a 55% decline in first quarter profits from a 25% drop in quarterly revenue.
Net income fell to $20 million compared with a net profit of $45 million in the same period a year ago. Quarterly revenue fell to $1 billion from $1.36 billion, due to a decline in new equipment sales throughout the company’s operations.
New equipment sales fell 45% as a result of soft market conditions outside the mining sector. Used equipment sales fell 23%, while used equipment rentals fell 19%.
Quarterly profits were bolstered slightly by a 13% decline in selling and administrative expenses, the result of cost cutting and productivity improvements. The company said it plans to cut administrative expenses by $200 million from 2008 levels.
“First quarter results came in as expected,” said Mike Waites, Finning International’s president and CEO. “Our business is improving, particularly in South America. The mining sector is posting a strong recovery, which will support earnings growth for us going forward.”
Finning’s sales in Canada reported the largest decline, falling $58.7% in the first quarter. U.K. revenues were down 20.2% and only $15.7% in the company’s South American operations.
Last week the company announced the sale of its U.K. rental equipment business for $171 million to an affiliate of Sun European Partners LLP. Proceeds from the sale will be used to reduce debt and further strengthen the company’s balance sheet.
Finning’s share price range during the past week: between $18.59 and $19.51; 52-week high: $20; 52-week low: $13.25.