09.08.2017

Mills decline continues

The Rental division of Brazilian scaffolder and contracting company Mills has reported further revenue declines and higher losses.

In the first half of the year the business achieved total revenues of R83.1 million ($26.6 million) almost 30 percent lower than this time last year. This included R2.3 million ($735,000) of new machine sales and R3.7 million ($1.2 million) of used equipment. The pre-tax loss for the period was R26.5 million ($8.5 million) compared to a profit in the same period last year of R4.7 million ($1.5 million). Capital expenditure in the six months was R2.2 million ($703,000)

Moving on to the second quarter total revenues were 22 percent lower at R42.3 million ($13.5 million) with a loss of R13.4 million ($4.3 million) compared to a loss in the same period last year of R7.5 million ($2.4 million). The revenues included R600,000 ($192,000) of new equipment sales and R3.5 million ($1.1 million) of used equipment.
Utilisation for the period was 53.3 percent down from 57 percent last year and this after shifting 170 telehandlers and 108 aerial lifts into sales inventory during the period.

The group as a whole saw revenue plunge 42 percent to R136.8 million ($43.7 million) with a pre-tax loss of R33.3 million ($10.6 million) compared to a loss of 57.4 million ($18.4 million) last year.

Vertikal Comment

It is a little surprising to see the decline continuing at these levels, but serves to illustrate just how over inflated the economy became and how far Mills overshot underlying demand for aerial work platforms in what is still a very young market.

Having said this if the company can stabilise the business this year it is still a very substantial powered access rental operation with a fleet that is increasingly depreciated. With the global economy picking up you have to think that Brazil will start to benefit and the market will pick up. Mills then needs to resume growth at a more rational pace. Alternatively it would end up with a valuable asset for international companies looking to move into the Brazilian market as it turns the corner.