Supplier news: Finning cuts 1,100 jobs amid sales slump

Citing weak sales, Caterpillar (NYSE: CAT) dealer Finning International (TSX: FTT; US-OTC: FINGF) announced it would cut its global workforce by 1,100 people, or 8%.

The move follows other job reductions earlier in the year, which brings the company’s total workforce cuts to 1,900 people, or 13%, for 2015.

Across Canada the firm has chopped 1,100 jobs for a 20% reduction this year.

The company is also downsizing its footprint in Western Canada, closing 11 facilities. When combined with the previously announced closure of 16 facilities in the region, the firm’s footprint will be cut by 20% in Western Canada by mid- to late-2016.

“While these are difficult decisions, we believe we are taking the right path to adjust our business to market realities and ensure financial strength, while positioning Finning to deliver customer service more effectively and efficiently over the long-term,” Finning president and CEO Scott Thompson said in a press release.

Thompson says the cuts have yielded results. “Our focus on managing the factors within our control has contributed to preserving a strong balance sheet and allowed us to improve profitability in our Canadian operations on a quarter-by-quarter basis throughout 2015, despite a challenging business environment.”

In this year’s third quarter the firm generated $140-million free cash flow in a 28% increase over third-quarter 2014, which the company says was driven by reduced equipment inventory and lower accounts receivable in Canada, as well as a contribution from a new Saskatchewan dealership. Revenue shrank 10% from the year-earlier quarter to $1.5 billion, largely from a 30% decrease in new equipment sales driven by weak demand from the construction and mining sectors.

Headquartered in Vancouver, Finning is the world’s largest Caterpillar equipment dealer. The firm sells and rents equipment, and provides parts and service to customers in the mining, construction, petroleum, forestry and power sectors. The company has operations in Canada, Chile, Argentina, Bolivia, Uruguay, the U.K. and Ireland. In 2014 the firm made $3.6 billion in revenue and employed 14,500 people.

At press time Finning shares traded at $19.17 apiece within a 52-week range of $17.33 to $28.61. The firm has 169 million shares issued and a $3.3-billion market capitalization.