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Finning takes hit on sale of materials arm

PLANT

FINNING UK has sold its materials handling division after months of struggling to make the profit required by its parent company.

The sale for £85 million to diverse US rental firm Briggs Equipment will result in Finning taking a charge of £16 million in the third quarter to cover losses on assets and goodwill.

But the price represents a sizeable loss on what the firm spent building the division up, including a £99 million acquisition.

The dealer said that the division, which covers the longterm rental of forklifts, telehandlers and loaders to industrial customers, no longer represents core business and the sale would allow it to concentrate on the three areas of equipment and engine dealerships and the Hewden hire operation.

Finning had high hopes for the materials handling division after expanding with the £99 million purchase of rental firms Lex Harvey and Lex Birchwood in 2003, but struggled to make it pay its way.

It made 88 people redundant in the past year, took £30 million of assets out of the company and had experienced problems integrating the computer systems of the two firms.

The whole UK business has been under pressure to raise its margins from the Canadian parent company, which has posted record turnover and profits as a group.

An analysts meeting was told in March that the parent company was looking at a range of drastic options to improve profitability in the UK, including franchising Hewden depots and even merging the dealership with competitors.

But Nick Lloyd, managing director of the UK business, said that the options were more a warning shot than a set of real goals.

He said at the time: 'These sort of far-reaching and longterm ideas are often presented to analysts and most of these never reach fruition.'