May 6, 2008 / 6:53 PM / 10 years ago

UPDATE 1-Finning profit rises slightly, despite C$ drag

(Adds details on results and new contract with Suncor)

TORONTO, May 6 (Reuters) - Finning International Inc (FTT.TO) said on Tuesday that first-quarter profit rose by 1 percent, buoyed by nonrecurring items such as gains on property sales but eroded somewhat by the Canadian dollar’s strength.

The company, which sells and rents heavy industrial equipment and engines, said net income was C$70.8 million in the three months ended March 31, or 40 Canadian cents a share.

That’s up slightly from profit of C$69.9 million, or 39 Canadian cents a share a year earlier.

Finning also boosted its quarterly dividend to 11 Canadian cents a share from 10 Canadian cents, and affirmed it was on track to meet its 2008 earnings forecast of C$1.70 to C$1.80 a share.

The Vancouver, British Columbia-based company said that without nonrecurring items, its diluted earnings per share would have been 35 Canadian cents, down 10 percent from a “very strong” 2007 first quarter.

The strong Canadian dollar eroded earnings by about 10 Canadian cents a share, the company said, calling it the “largest foreign exchange headwind” it has contended with.

Still, Finning’s revenue from continuing operations jumped 4 percent to C$1.4 billion in the quarter, driven by strong equipment sales. Prices for certain key commodities continue to be robust and to drive demand in Canada and South America, it noted.

“New equipment sales remain at attractive levels and we continue to build the large equipment fleets in our territories,” incoming President Mike Waites said.

Separately, Finning said it had agreed on a major mining equipment and support services deal with Suncor Energy Inc (SU.TO) worth about C$360 million.

The equipment, including mining trucks and bulldozers, is scheduled to be delivered to Suncor through 2008 and 2009. The deal includes customer support from Finning through various agreements ranging in term to about 10 years.

The trucks will be used to meet Suncor’s increased production levels from existing operations, as well as mine expansions, Finning said. ($1=$1.00 Canadian) (Reporting by Lynne Olver and Leah Schnurr; Editing by Bernadette Baum)

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