Perhaps the most tangible evidence that JSE-listed Eqstra Holdings was tentatively starting to emerge from a bruising trough was that it had increased its employment numbers by 600 people over the last year, to reach a staff total of 6 600.
“We are investing in technical support, in ramping up production,” said CEO Walter Hill in Johannesburg on Wednesday.
“Of the 600, 320 are apprentices and field service agents in training.”
While the full 2010 financial year had dented the company’s earnings severely, with revenue down 12% to R6,9-billion, and operating profit down 23,9% to R718-million, the second half of the year saw a return to profitability, with profit before tax of R100-million, compared with a loss of R20-million in the first half of the financial year.
“This is a tale of two halves,” said Hill. “This will be the year of the trough for us . . . hopefully we are entering a recovery period now.”
He pointed out that the group’s operating margin had again inched up to 12% in the second half of the 2010 financial year, up from the 6% achieved in the second half of the previous financial year. Inventories had also been cut by 30% for the 2010 financial year compared with 2009.
Hill said Eqstra is “showing signs that we have taken control of the business . . . we have managed to stabilise the business, turning it around.”
None of the divisions within the Eqstra group achieved growth in revenue for the 2010 financial year compared with the previous financial year, with contract mining and plant rental (including MCC) dropping 1,2%; distributorships (including Terex and New Holland Construction) shedding a massive 45,1%; and industrial equipment (including Toyota Forklift) seeing revenue decline by 10,5%. The passenger and commercial vehicle division (including FlexiFleet) managed to curtail its revenue drop to 1,4%.
“We took the most pain in distributorships,” acknowledged Hill. “We are giving a lot of attention to the recovery of this business.”
He added, however, that a shrinking market was largely to blame for the division’s R116-million operating loss in the 2010 financial year, jumping from a R16-million loss in the previous year.
Terex supplies equipment into the mining industry, while New Holland Construction supplies capital equipment into the construction sector, with both sectors hard hit by the recession.
Hill said there was currently a lot of activity in the mining sector, which offered hope for the distributorship division, but added that the construction market in South Africa “was still very flat”.
He was also optimistic about the contract mining market, noting that it had now expanded by such a margin that it again offered alternatives should a particular project stall.
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