Where is the demand for heavy equipment?
At last week’s Annual General Meeting, Seven Group Holdings Limited (ASX: SVW), the Kerry Stokes-controlled diversified operating and investment company, revealed there was more pain to come from their WesTrac Australia business.
WesTrac operates as the sole Caterpillar dealership in WA, NSW and the ACT. It supplies and services new and used Caterpillar machinery for the mining, construction and forestry markets.
WesTrac Managing Director and CEO DonVolte said, “We estimate that up to 10 per cent of the installed equipment in our territories is currently parked-up. This has facilitated component cannibalization to reduce cash burn with a consequential reduction in our service and parts market and very limited demand for new equipment.”
While WesTrac Australia recorded revenue and underlying EBIT for the year to June 2014 of $2.35 billion (down 42 per cent) and $203m (down 55 per cent), respectively, we suspect there will again be serious downside to both in the current financial year, particularly given the limited visibility of demand.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
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