Equipment Seller’s profit increases
Cervus Equipment Corp. has posted third quarter profit of $8.74 million, up 1.6 percent from $8.61 million in the same period last year.
Revenue was $260.8 million, up 11.5 percent from last year, the company said in a news release.
Cervus has 29 John Deere agricultural dealerships and 19 commercial and industrial equipment dealerships.
Revenue in the agricultural equipment segment rose 8.9 percent, mostly because of the addition of dealerships.
Revenue rose only 0.1 percent when comparing the same dealerships that operated in the same quarter last year.
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Used equipment sales rose $11.7 million, or 23.3 percent, in the quarter.
New equipment sales fell $6.2 million, or 6.7 percent, mostly as a result of early arrival of new equipment, which allowed delivery to customers in the second quarter. Year to date, new tractor and harvesting equipment sales are up 19 percent.
Parts and service revenue rose almost 35 percent.
Agricultural sale gross margins in the quarter slipped to 16 percent from 16.4 percent because of stronger competition and increased used inventory levels across the industry, the company said.
Used equipment sales trim profit
Rocky Mountain Dealerships posted third quarter earnings of $5.92 million, down from $8.45 million in the same period a year ago.
The company, which features Case and New Holland equipment, has 38 locations across the Prairies.
The company said its mix of sales has shifted to include more used equipment.
New machines with Tier 4 engines are more costly, and some customers are turning to used units as they look for less expensive ways to upgrade their equipment.
As well, the company has several initiatives aimed at moving its used inventory.
The result was a decrease in new equipment sales of $5.7 million and an increase in used equipment sales of $32.9 million during the quarter, the company said in a news release.
Used equipment sales generally have lower profit margins.
Slower new construction equipment sales also affected results. Slowing construction activity has led to increased inventory at most Alberta dealerships, leading to a competitive market and tighter profit margins.
Costs increased because of additional commissions and salaries driven by incremental sales activity and the acquisition of new branches.
