jackman provides some color

Malcolm Jackman COA chief executive provides some color.

Areas of concern post 6 mths ending 31/12/06 results:

1-Lower than expected NPAT for 6 mths ending 31/12/06.

2-Companies shifting to buying equipment rather than renting.

3-Larger than expected capex of $400m.

4-Slowing asset turnover (sales volume generated per dollar of equipment in rental fleet).

5-Future earnings and forecasts.


In respect of the above Jackmen says quote…

1-“I think what happened once they were shocked by the result is that they looked under a lot of rocks,they were expecting something with a five in front of it and they thought net profit of $46.5m even though it was up 8 per cent was a bit low on expectations” Jackman says.

2-“We have not seen any serious change in peoples view on that,there has always been a mix between rental and ownership of equipment among customers” Jackman says.

3-“People were wondering whether we were getting enough growth from the amount of money we were spending,that number($400m capex forecast)was probably a little more than most people were thinking and that got everybody thinking a little bit as well,certainly as we look forward, in financial year 2008 I believe you’ll see an easing of our investment profile as we take advantage of the investments we’ve made in previous years, and I think there’s quite a bit of catch up coming with that” Jackman says.

4-“This is a result of a shift to larger equipment to meet the demand of our larger clients,the earnings profile is actually better because that bigger gear goes out for longer and you don’t need as much effort to get that amount of dollar value of fleet working, because you’ve got fewer items involved” Jackman says.

5-“We’re fixated on still getting double digit bottom line growth, even though the demand side is growing by 3 to 5 per cent on a weighted average basis, we can still achieve 10 to 12 per cent bottom line growth consistently over the next few years,I think theres’s a bit of wait and see with the share price” Jackman says.


Source afr 15/3/07.