Coates makes fleet efficiency gains

Coates said the ongoing roll-out of its hub and spoke depot structure had helped it reduce repair and maintenance costs on its equipment fleet.

The Australian rental company reported that repair and maintenance costs as a proportion of revenues had fallen to 17.3% for the six months to 31 December. The figure was nearer to 21% in its 2020 financial year and has been falling consistently since then.

Scissors at one of Coates’ yards.

The details were issued as part of Coates half year results, with revenues down 4% to A$546 million.

Ryan Stokes, CEO of SHG (formerly Seven Group Holdings), the owner of Coates, said the “modest decline” reflected “resilient customer activity in the East, West and North [of Australia], and lower activity in Victoria.”

The EBITDA margin was 46.4%. SGH said cost and pricing discipline – including a 7% reduction in personnel costs - drove growth in EBITDA and EBIT margins.

“Market conditions remain mixed for Coates”, said Stokes, “with softer trading conditions in Victoria ongoing due to major project deferrals, partially offset by resilient activity in the East.

“Coates has maintained pricing discipline across all regions against this increasingly competitive backdrop.

“The outlook for Coates remains positive, supported by utilities and transport infrastructure spending, which is expected to grow by 11% and 4% respectively in 2025.”

The company reported that it has been reducing the proportion of its fleet unavailable for rent. For the half year it was around 17% - based on original equipment values – which compares to almost 24% in financial year 2020 and around 20% in 2022.

Market shares?

The company said its market share in the ‘top tier’ customer segment was 29.2%, falling to 20.1% with mid-tier customers and 16.5% for trades customers.

SGH also owns Caterpillar dealer WesTrac. Half year revenues were A$3.2 billion, which was 8% higher year-on-year. SGH said the increase was driven by growth in both capital sales and services.

Capital sales of A$1.2 billion were up 13%, while a 5% increase in services revenue to $2.0 reflected “strong demand from the growing and ageing installed base, partially offset by a low single-digit parts price decrease effective 1 July 2024.”

WesTrac’s sales territories in Australia cover Western Australia, New South Wales and the Australian Capital Territory (Canberra).