Finning is sensing the potential for future fleet renewals, rebuilds and autonomy conversions from its Caterpillar off-highway truck customers in Western Canada as the average age of its Cat truck population in this region increases.
Commenting on this during its September quarter results – which saw revenue and gross profit drop 21% and 15%, respectively – the company was able to provide some positive forecasts for its business in Canada and Chile.
Finning said it was gearing up for higher production out of Canada’s oil sands sector in 2021, explaining output had recovered from the lows seen during the onset of COVID-19 and the company was expecting an increase next year.
“Oil sands producers’ truck fleet utilisation returned to pre-COVID-19 levels at the end of September, and contractor fleets have begun to increase utilisation and should ramp up further in Q4 (December quarter) 2020 and into 2021,” the company said. “We expect product support activity in the oil sands to improve in Q4 2020 and into 2021, driven by catch up on major rebuild and maintenance work and an increase in oil production and non-production mining activities.”
Finning said while restricted capital spending and ongoing cost containment were impacting demand for new mining equipment, the company expected mining product support activity to improve as customers increase production output and resume full-scope maintenance activities.
Finning’s mining customers in Western Canada operate around 620 large and ultra-class Caterpillar off-highway trucks, of which 6% are autonomous (mostly in the oil sands). The average age of this Caterpillar truck population in Western Canada is about 11 years.
As mentioned, this large and ageing fleet is expected to drive opportunities for future fleet renewals, rebuilds and autonomy conversions, as well as continued demand for product support, the company said.
It added: “We are also seeing a notable resumption in request for proposal activity from Canadian mining customers.”
In the Chile mining sector, meanwhile, Finning said COVID-19-related operating restrictions were easing, with customers beginning to catch up on component exchange and major maintenance work.
“We expect mining product support revenue to recover significantly as we exit 2020 and begin 2021,” it said.
Finning was optimistic about mining recovery in Chile in 2021, driven by a strengthened copper price and expected increase in copper production, it said.
Over 570 large and ultra-class Caterpillar off-highway trucks with an average age of 11 years are currently operating in Chile’s copper mines and will continue to drive demand for product support, it added.
“We are also encouraged by the resumption of Teck’s QB2 project – the first deployment of autonomous trucks in Chile – and have started to deliver equipment to QB2 in Q4 (December quarter) 2020,” Finning said.
Finning said it has also seen a notable increase in request for proposal activity from mining customers in Chile.
