16.05.2013

Strongco slides into the red

Canadian crane distributor and rental company Strongco has posted a pre-tax loss in first quarter on slightly higher sales.

Total revenues were $97.5 million -up 0.7 percent on last year, however sales slipped back two percent to $60.6 million, while rental revenues were $6.7 million, up 29 percent from last year and product support revenues edged up two percent to $30.2 million.

Higher distribution costs and lower margins helped turn last year’s pre-tax profit of $1.55 million into a loss this year of $2.98 million.

Chief executive Robert Dryburgh said: “Our markets took a marked pause in the first quarter, most significantly, losing momentum in the month of March which saw customers postpone deliveries and delay conversions on Rental Purchase Options. Compared to the same quarter last year, our overall market declined, particularly in Alberta and Quebec. However, with help from an improved market presence through new branches, Strongco’s revenues were relatively steady in comparison to the first quarter of 2012. While our cost base has increased from last year, the major factor affecting expenses in the quarter were a combination of under-absorption of labour and ancillary costs, and a much lower level of warranty activity. Both of these were adversely affected by weather and economic conditions which curtailed machine use and, consequently, the utilization of our field crews.”

“We remain focused on reducing our level of equipment inventory which has resulted in higher debt and interest costs. In conjunction with customer demand and the seasonality of our business we are controlling incoming orders and placing an internal focus on selling older products.”

“Although we did not see the increase in sales levels that were anticipated for the quarter, our backlog level remains strong and importantly, customer activity has substantially increased in April and May. The customer hesitancy experienced in the first quarter is diminishing with the late arrival of spring weather conditions. Given the current level of activity combined with modest economic growth projections, we remain optimistic of continuing growth in 2013.”