While Eqstra’s embattled contract mining and plant rental division delivered an improved performance in the year to June 30, on the back of a successful turnaround, persistent global commodity pressures and related client challenges faced by the division continued to somewhat offset the financial performance of the industrial and capital equipment group.
Overall, the JSE-listed group posted a 2.6% increase in headline earnings a share to 78.7c and, despite the R97-million impairment of leasing assets, earnings a share increased 1.2% to 61.3c in the year under review.
Profit after tax improved by 1.2% to R254-million, while operating profit of R1-billion was reported during the period to June, a 10.6% hike on the prior year owing to a strong performance from its fleet management and logistics and industrial equipment divisions.
Suboptimal use of revenue-generating assets and the conclusion of lossmaking contracts in the contract mining and plant rental division, as well as the closure of used vehicle retail branches and the termination of subcontractor agreements within the fleet management and logistics unit resulted in a 5.2% drop in revenue to R9.5-billion during the year under review.
The industrial equipment division grew its forklift market share, but low mining truck unit sales contributed to reduced distribution revenue.
The company’s contract mining and plant rental division’s revenue contracted 9.3% to R4.1-billion, while operating profit grew 29% to R308-million.
However, the unit’s loss before tax widened from R24-million in 2014 to R38-million in 2015.
The losses were somewhat curtailed through a successfully implemented turnaround strategy, which saw an improvement in efficiencies, ensured execution was in line with contract terms and tenders, improved resource use and staff changes on projects and employee engagement.
Meanwhile, the industrial equipment and the fleet management and logistics divisions performed well during the period under review.
During the 12 months to June, the industrial unit posted steady revenue generation of R3-billion, with operating profit expanding 5.5% to R328-million and profit before tax 5.2% to R161-million.
The fleet management and logistics division’s revenue contracted 11.2% to R2.5-billion, while operating profit rose 12% to R410-million and profit before tax 4.4% to R190-million.