Mills reports positive third quarter
By Euan Youdale13 November 2020
Covid-19 continued to cause challenges for Brazil-based rental company Mills Estruturase Serviços de Engenhariain in the third quarter of 2020. However, there were signs of a gradual recovery in economic activity through the quarter, providing the company with its first increases in recent times.
The impact of the pandemic was first seen by the company from the end of March, with the peak being in May. The slow recovery began in June, accompanied by a wider relaxation in government restrictions and the reopening of industry, shopping centres and other establishments throughout Brazil.
The improving economic environment, combined with actions taken by Mills to mitigate the impact of Covid-19, resulted in a 19% increase in net revenue across the company of R$129.4 million (US$23.7 million), compared to the same period in 2019. The figure repesented a 36.1% rise on the second quarter of 2020.
Mills’ Rental Business Unit saw a 15.3% increase in consolidated net revenue during the third quarter, compared to the second quarter of the year. September closed at almost the same level as the pre-Covid period, with 92% of the units on rent compared to the first quarter of the year.
With equipment prices remaining almost the same during the pandemic, the rental division was boosted thanks to sales of used equipment, and reported adjusted EBITDA of R$30million ($5.5 million), 73.8% higher than the second quarter of 2020. The period also represented a rise in consolidated net Income, after six years of consecutive quarterly losses.
As previously disclosed, the company has reduced its fleet in recent years as a result of the continued challenges in the infrastructure sector in Brazil, a low utilisation rate and the need to create space at the company’s branches to absorb Solaris’ rental equipment, following Mills’ acquisition of the company last year.
Rental net income in the quarter amounted to R$101.2 million ($18.5 milion), 24.8% higher compared to the previous quarter. Rental net revenue increased 15.3% to 107.1 million quarter-on-quarter, mainly due to an increase in the volume of equipment on rent, reflecting the resumption of industrial, commercial and service activitiesl.
The construction division’s net revenues amounted to R$32.6 million ($5.97 million) in the third quarter, 89.2% higher compared to the previous quarter. This was thanks to the increase in rental revenues that showed resilience in the Covid-19 pandemic due to the company’s fleet product mix and its longer contract rental agreements.
Additionally, the recovery of debt through the courts from a customer in the quarter led to additional revenue of R$11 million ($2 million). Excluding this positive effect, Construction adjusted EBITDA would have ended the quarter at the breakeven level, in line with the recovery strategy for the business unit.