BRITISH COLUMBIA

Finning's South American arm wins $500 million of contracts; Q3 revenue up 21%

11/08/2012 10:29 EST | Updated 01/08/2013 05:12 EST
VANCOUVER - Heavy equipment dealer Finning International (TSX:FTT) has received contracts worth a total of US$497 million from several mining companies

The contracts were won by the South American arm of the Vancouver-based company, which is the world's largest dealer of Caterpillar equipment.

The biggest of the deals was a $130-million equipment sale coupled with a five-year maintenance letter of intent worth $120 million awarded by CAP Minera for the El Romeral iron ore mine in northern Chile.

Finning also received an eight-year maintenance contract, worth $130 million, for $55 million of equipment purchased earlier by Codelco for the Rajo Sur open pit mine at the El Teniente copper operation in Chile.

Another order, valued at $62 million, was for mobile equipment purchased by an unidentified customer for a mine in Chile.

Finning reported separately that its third quarter revenue rose to $1.6 billion, 21 per cent higher than a year earlier due to widespread growth across its operation.

Its net income more than doubled to $84 million or 49 cents per share, up from $35 million or 21 cents per share and a penny ahead of a consensus estimate compiled by Thomson Reuters.

"Our focus on executing our strategy and healthy demand in our key markets enabled us to deliver record quarterly earnings," Finning president and CEO Mike Waites said in a statement.

Finning's quarterly report follows a warning by Caterpillar, which said on Oct. 22 that its 2012 revenue and profit projections have been lowered in the midst of a weaker world economy.

Caterpillar's latest guidance is for revenue is expected to grow 9.7 per cent to $66 billion this year, after rising 41 per cent in 2011. Profit is now forecast at $9 to $9.25 per share, down from a previous forecast of $9.60 per share.

"Given indications of demand softening in some markets, we are operating with caution and continue to monitor business conditions closely," Waites said Thursday in Finning's announcement.

"Looking ahead, we remain confident in our ability to drive revenues even if equipment sales weaken. We have the benefit of a resilient product support business, more service capacity coming on stream to support the ever increasing machine population, and an expanded product and service offering,"

Finning shares were down 35 cents at $23.34 at the Toronto Stock Exchange at midday.