Growing Emeco incurs loss

A big interest bill and one-off amortisation charges have seen heavy equipment hire company Emeco Group report a net loss of $2.1 million for the half-year to June.

Emeco is one of the biggest suppliers of heavy equipment to the mining and earthmoving industries in Australia and has achieved strong growth in recent years.

The privately owned business also carries a large amount of debt, with total liabilities of $410 million, equal to 73 per cent of total assets. Its debt includes $125 million of exchangeable notes, which were issued in April and are listed on the Australian Stock Exchange.

Emeco said its sales and underlying earnings for the 12 months to June were better than its prospectus forecasts and well above the previous year.

Revenue increased by an impressive 18.5 per cent to $292 million, while underlying earnings, before interest, tax, depreciation and amortisation, increased by 30.2 per cent to $95.6 million.

An appendix to the results announcement had full financials for the half-year to June, which afforded a more detailed insight into the company’s performance.

The company had an unusually large amortisation charge after a change of ownership last year – when private equity funds bought the business – triggered a review of its intangible assets.

It also had borrowing costs of $16.9 million. On the operational front, Emeco increased the size of its Australian rental fleet to 319 machines to meet demand.

The company said it would pursue organic growth and acquisitions in Australia. In Indonesia, the rental fleet was increased to 112 machines and the company is planning further increases to meet expected demand.

Emeco is expanding its operations in the United States and Canada, where it recently acquired a business that has 120 items of rental equipment.