Review of Operations - Finning (UK) - Finning International Inc.

finning [uk]
Finning acquired two Caterpillar dealerships in the U.K. in 1983 and a
third in 1997 to become the Caterpillar dealer for England, Scotland
and Wales operated under Finning (UK) Ltd. Finning (UK) is also the
distributor of Caterpillar-branded Sabre Perkins marine power engines
for England, Wales and Ireland and Caterpillar-branded MaK marine
engines for the U.K. and Ireland.
finning international inc. annual report 2003
Stephen Mallett
Managing Director, Finning (UK) Ltd.
“We have unlimited opportunity in
the U.K. to increase market share
as we continue to add value for
customers and solve their
problems by working with
Caterpillar and applying the
Finning Formula.”
Finning (UK) acquired the Finnpave
distribution business in 2001, now
operated as its specialist surfacing
equipment division. In 2003,
Finning (UK) acquired the
majority of the assets of Lex
Harvey Limited, the largest
independent materials handling
company in the U.K. Finning (UK)
has 22 branches and 2,387
employees with its head office
located in Cannock, England.
financial performance
Total revenue was $934.2
million, compared with $828.2
million in 2002, contributing
26.0% of Finning International’s
$3,593.3 million total revenue.
In local currency, Finning (UK)’s
2003 total revenue was £409.2
million, compared with £351.7
million in 2002.
highlights
Expanded to a 20% share of the
U.K. materials handling market
with the $213 million acquisition
of Lex Harvey Limited. The
acquisition contributed revenues
for the seven-month period since
the acquisition of $109.4 million
to Finning (UK) in 2003, 11.7% of
total Finning (UK) revenues.
Continued to deliver Caterpillar
equipment to several of the
largest infrastructure projects
in the U.K., including the
construction of the new £3.7
billion Terminal 5 at Heathrow
airport. Approximately 75%
of all construction equipment
at Heathrow’s Terminal 5 is
Caterpillar. Finning customers on
the project include C.A. Blackwell,
Laing O’Rourke and its Select
Plant Hire division, and Foster
Yeoman Limited.
Received an order from AMPL,
the plant hire division of Alfred
McAlpine PLC, to supply 38
pieces of new Caterpillar
equipment, which will be used
on the A1M highway project
north of Leeds.
opportunities
Materials handling
The acquisition and integration
of Lex Harvey into Finning
(UK)’s materials handling
business will result in significant
synergies in administration,
facilities, personnel and
inventory management.
The Materials Handling
Division has 15,000 lift trucks
on long-term rental and provides
service and backup on a further
12,000 customer-owned units.
With more than 12,000 customers
and a rapidly growing short-term
rental fleet of just under 3,000
units, the Materials Handling
Division helps to provide stability
and predictability to Finning
(UK) revenues.
Finning (UK) has the only
centralized materials handling
business in the U.K. and has
increased market share in each
of the previous four years. The
new Finning National Materials
Handling Centre, called Orbital 7,
is 140,000 square feet of offices
and shops dedicated to building
custom lift trucks for special
customer needs in three weeks
from order to delivery.
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Maintenance is performed by
more than 700 engineers at
Orbital 7 and 400 resident
locations throughout the U.K.
The Company provides next-day
parts delivery on more than
18,000 items and guarantees
that a locally-based engineer
is available to provide on-site
repairs whenever necessary.
Economic growth
The U.K. government forecasts
Real Gross Domestic Product
growth of 2.5% in 2004,
compared with 2% in 2003 and
1.7% in 2002. Construction will
comprise a strong component
of this growth, providing an
opportunity for Finning to increase
market share in all its sectors.
Aggregates market growth
The U.K. government’s public and
private transport expenditures of
£180 billion over 10 years to
repair and expand the country’s
transportation infrastructure is
proceeding on plan. Aggregates
(rock, sand and gravel) are used
in the building of road and rail
beds, a market in which Finning
has a 60% share.
iso certification
Finning (UK) was the first in the
industry in the U.K. to be certified
and registered to ISO 9001
standards for quality. In 2003,
this was successfully extended to
the Company’s Finnpave
subsidiary and the Lex Harvey
business. This demonstrates to
customers that the Company is
committed to fulfilling their
quality needs, meeting applicable
regulatory requirements, and
enhancing customer satisfaction.
In June 2003, Lloyds Register
Quality Assurance also certified
and registered the Company’s
environmental management
system under the environmental
standard ISO 14001. This
demonstrates the Company
is managing its environmental
challenges in a responsible
way and is achieving
continuous improvement in
environmental performance.
new dbsi system
In early 2004, Finning (UK)
installed the customized DBSi
computer software system,
designed specifically for
Caterpillar dealers. DBSi
addresses several tactical
areas that will increase the
Company’s opportunities,
such as improved supply chain
management, greater product
customization, improved cost
controls and asset utilization,
and enhanced customer
relationship management
and service.
Photo: CAT equipment working
on site at Heathrow Terminal 5.
finning international inc. annual report 2003
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