Toronto-listed Canadian Caterpillar equipment dealer Finning International says the outlook for mining equipment sales in western Canada and South America remains positive after it posted 22% higher revenue, year-on-year, in the first three months of 2022. Sales revenue hit C$2 billion for the period and Finning’s consolidated equipment backlog rose from $1.9b at the end of December to $2.1 at the end of March.
Based in Surrey, British Columbia, Finning sells Caterpillar equipment, parts and services in western Canada, Chile, Argentina, Bolivia, the UK and Ireland.
“The market outlook remains positive in all our regions, supported by strong commodity prices, public and private sector investment, and economic growth forecasts,” CEO Scott Thomson said.
“With a very strong equipment backlog, increasing arrival of inventory, and growing demand for product support, we are ramping up for increased activity for the remainder of the year and targeting above mid-teens EPS growth in 2022.”
Finning said Q1 new equipment sales were up 11% yoy in Canada, “driven largely by mining deliveries”.
In South America, “net revenue increased by 18% from Q1 2021, with higher activity across all sectors, especially in mining. New equipment sales were up 32% and product support revenue increased by 14%, with construction product support up 31% from Q1 2021.”
“Healthy commodity markets, including base and precious metals, oil, natural gas, metallurgical coal, lumber, uranium, and potash provide a positive backdrop for mining activity in western Canada and support increased capital spending, including in the oil sands. We expect the large and aging mining equipment population in our territory to continue driving demand for product support, including rebuilds, and opportunities for fleet renewals.
“We expect a strong copper price, large and mature equipment population, an declining ore grades to continue driving healthy mining activity in Chile.
“We continue to closely monitor the constitutional reform process and expect a moderate increase in mining royalties. While the timing of investment decisions related to greenfield and new expansion projects remains uncertain, we are constructive about long-term copper mining growth in Chile.
“We are in a great position to capture opportunities for new mining equipment and autonomous solutions for brownfield expansions and greenfield projects.
“We expect robust activity in the Chilean construction sector to be driven by growing demand for mining infrastructure and the government’s infrastructure investment program.
“In Argentina, we are benefitting from improved activity in construction, oil and gas, and mining, however, the overall business environment continues to be challenging. We remain focused on managing fiscal, regulatory, and currency risks, including high inflation and ARS devaluation.”