Industrial and capital equipment group Eqstra has reported an 11.6% increase in revenue to R9-billion for the year ended June 30, with operating profit up 16.2%, to R1-billion.
The revenue jump came from increased equipment sales and the positive impact of new acquisitions in the Industrial Equipment business, as well as improved domestic contract mining production volumes in the Contract Mining and Plant Rental business.
The Fleet Management and Logistics divi-sion, however, did not produce the same positive results.
“Eqstra continued to deliver a robust finan- cial performance amidst another period of tough market conditions, global commodity weakening and domestic economic uncer-tainty,” says Eqstra CEO Walter Hill.
“Our strategy of providing long-term leasing of mobile assets and the related value-added services to clients’ operations continued to prove its resilience.”
Hill says Eqstra has ensured that its revenue streams remain sustainable.
The Industrial Equipment, and Fleet Man- agement and Logistics divisions have increased their revenue-generating asset fleets by 26.4% and 8.1% respectively and, while this invest-ment has a short-term negative impact on profit- ability, it should result in long-term annuity revenue and earnings.
“Our success in turning around the Contract Mining and Plant Rental business will mean improved ongoing results,” he adds.
Hill says Eqstra spent the past year diver-sifying the group further, adding that it will continue with these initiatives to further improve the group’s resilience to global and domestic economic volatility.
“The execution of our business plan and reaching strategic targets this year point to a continued improvement in 2014. Although the domestic economy will remain under pressure, demand from our corporate client base should remain resilient,” notes Hill.
“We expect our group earnings performance to continue, although we remain cautious on the impact of the current wave of industrial action.”
Hill believes the Industrial Equipment divi- sion remains well positioned to grow its market share through its domestic Toyota forklift franchise.
The division produced 29% of group revenue for the year ended June 30, delivering a 22.3% increase in operating profit to R258-million.
Fleet Management and Logistics had a challenging year and should deliver a much-improved performance going forward, notes Hill, following the curtailment of noncore and lossmaking activities.
This Fleet Management and Logistics division generated 25% of Eqstra revenue for the year ended June 30, but saw operating profit dip 12.4% to R311-million.
The drop in profit was due to losses incurred in noncore activities and the related one-off closure costs of these activities. Logis-tics operations had also been rationalised.
The Contract Mining and Plant Rental business should continue to build on an improved operating performance, compared with recent years.
“This, together with the renewal of key contracts during the year and increased volumes from clients, results in a positive outlook,” says Hill.