double didgit growth forecasts

Coates Hire Limited (COA) today upgraded its sales growth forecasts from “high single digit” growth to a range of 12-15%. The group said its preliminary sales figures at the end of October suggest that first half growth should exceed overall sector growth.

In August the construction hire group announced a 102% increase in profit to $33.2 million for the year ending 30 June 2003. Coates attributed the increase to a 29.8% growth in hire sales.

"The company expects the trend will continue and possibly accelerate," Coates said in its ASX release today.


However, Reuters Global Estimates consensus analysts have forecast sales of $417 million in FY04, representing growth of only 5%. Analysts have also estimated an after-tax profit of $42.3 million before goodwill, amortisation and exceptional items, which marks a 22% increase on last year’s result.

"In line with its stated strategy to focus on leveraging top line growth into bottom line performance and shareholder returns, it is Coates' intention to ensure that this growth will translate into earnings gains in the range of 20%-25% above last year," Coates said.

As a result of improved sales performance and a continued positive outlook for the broad construction sector, Coates indicated it would invest a further $10 million in hire fleet. This brings gross hire fleet re-investment for the 2004 financial year to $90 million,

In addition, the group said it intended to renegotiate its current debt facility to more accurately reflect the company’s current performance and balance sheet.