November 13, 2008 / 7:15 PM / 10 years ago

UPDATE 1-Finning profit up, but downturn hits outlook

TORONTO, Nov 13 (Reuters) - Finning International Inc (FTT.TO) reported a slightly higher quarterly profit on Thursday, aided by demand for mining and heavy construction equipment in Canada and South America, but the global economic downturn led it to lower its 2008 earnings per share forecast.

Finning, which sells and rents heavy industrial equipment and engines, said third-quarter net income was up 1.9 percent to C$64.8 million ($52.4 million), or 37 Canadian cents a share. That compares with C$63.6 million, or 35 Canadian cents a share, a year earlier.

Analysts had expected a profit of 45 Canadian cents a share, according to Reuters Estimates.

Weaker outlooks for Western Canadian natural gas drilling activity and for the construction industry in Canada and the United Kingdom led Finning to lower its forecasts.

The company now says it expects earnings per share of between C$1.50 and C$1.60 for 2008. That’s down from its last forecast of C$1.65 to C$1.75 a share. Earlier in the year it had forecast C$1.70 to C$1.80 a share.

Revenue at the Vancouver, British Columbia-based company increased 10.1 percent in the third quarter to a record C$1.46 billion. The company said revenue was driven by strong equipment sales and demand for customer support services.

Finning also said it has a record backlog of equipment orders, mainly from mining, oil sands, and power systems customers, worth C$2 billion.

“The backlog reflects continued solid demand from mainly our mining, oil sands, and power systems customers,” Mike Waites, Finning’s president and chief executive, said in a release.

“Many of these mining customers are low cash-cost producers whose mines are expected to continue operating notwithstanding lower commodity prices,” he said.

Finning said it has committed lines of credit in place through 2011 and expects strong cash-flow generation in the fourth quarter.

Finning announced a quarterly dividend of 11 Canadian cents per common share, payable on Dec. 12, to shareholders of record on Nov. 27. ($1=$1.24 Canadian) (Reporting by John McCrank; Editing by Peter Galloway)

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