Finning reports decline in Q4 profit to $93M; cites increase in income taxes

VANCOUVER – Finning International Inc. (TSX:FTT) has reported a 10 per cent decline in fourth-quarter net income, with the world’s largest Caterpillar dealer blaming the reversal mainly on higher income taxes.

Vancouver-based Finning says net income in the three months ended Dec. 31 was $93 million or 54 cents per share, down from $103 million or 60 cents in the same 2012 period.

The company said the effective tax rate was 25.1 per cent, up from 16.4 per cent in the same 2012 period, primarily the result of foreign exchange impacts due to the devaluation of the Argentine peso.

Meanwhile, the effective tax rate in the 2012 quarter had been unusually low due to the benefit of previously unrecognized tax losses.

Revenue rose three per cent to $1.796 billion from $1.746 billion as improvements in Canada and the United Kingdom and Ireland more than offset a revenue decline in South America.

For the full year 2013, revenues increased three per cent to a record $6.8 billion, driven by approximately $215 million of additional revenue from the mining shovels and drills business, along with organic growth in product support.

Net income and basic EPS were also up three per cent to $335 million or $1.95 per share, also both records.

“Our Q4 results were in line with our expectations. Excluding one-time items, operating results improved year over year, as we grew our top line and improved EBIT performance in Canada,” president and CEO Scott Thomson said in releasing the results after markets closed.

“Importantly, we generated significant free cash flow, which enabled us to bring our net debt to invested capital ratio down to near the midpoint of our target range,” Thomson added.

On the Toronto Stock Exchange, Finning shares closed up six cents at $28.36 on Wednesday.