Cervus Equipment (TSX:CERV) reported on Thursday a jump in sales from its network of Canadian Peterbilt dealerships during the first quarter but warned that COVID-19 will weaken demand for trucks.
The Canadian heavy-equipment seller lost C$2.7 million, or C$0.17 per share, on C$182.5 million in revenue during the quarter. The loss was essentially unchanged from a year ago, while revenue increased by 9%.
CEO Angela Lekatsas highlighted the fact that on an adjusted pretax basis, Cervus reported turning a slim profit of C$0.5 million.
“The substantial improvement in first-quarter profitability is directly tied to the strategic and decisive actions we took in 2019 to right-size our used agriculture equipment inventory, restructure parts of our organization and focus on operational efficiencies,” Lekatsas said in a statement.
Revenue at Cervus’ transportation segment — consisting of its truck dealerships and service centers — increased by 17% from a year ago to C$77.4 million. The biggest jump came from a 46% increase in sales of new equipment.
Cervus noted that the clearing of factory backlogs helped improve transportation equipment sales.
Cervus warned of headwinds for its Peterbilt dealerships, primarily located in Ontario, with slowdowns in large stretches of the economy.
“While lower fuel prices have reduced transportation input costs, this is not anticipated to offset the short-term decrease in transportation demand until underlying economic activity resumes,” the company said in its management and discussion analysis for the quarter.
Revenue for Cervus’ largest segment, agriculture, increased by 8% during the quarter to C$167.8 million.
Cervus operates heavy-equipment dealerships in Canada, Australia and New Zealand.
Lekatsas will discuss the results with analysts during a conference call Friday.
