Newsletter #375 (View other news stories)
Rental demand up for SA French
Spartan, South Africa
Wednesday, 27 Aug 2008
 Warwick van Breda |
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SA French has reported an increase in equipment rental demand despite uncertainty in the South African market.
The tower cranes distributor reports equipment rental is up 6% from last year to 10% of the company’s turnover with increased growth in telehander rentals.
However, the electricity supply crisis in January has influenced SA French’s bottom line. The company expects revenues for the year to be ZAR150 million (USD19.2 million) for the year, compared with the prospectus estimate of ZAR190 million (USD24.3 million).
The increase in the rentals rather than sales of equipment indicates a shift from short-term profitability to longer-term revenues from rentals.
Warwick van Breda, SA French’s operations director, says while there is uncertainty in the market in terms of additional investments, there are still projects in progress.
"There are a number of residential and mixed-use developments under way, and it is on these projects that tower crane use is critical.
"We have seen an increase in the residential housing market and the long-awaited spend on infrastructure is finally coming on line.
"There are still a number of jobs that are in final stages of planning or have broken ground – in which case there is demand.
van Breda is not concerned about the uncertain market. He tells Forklift Action News that the uncertain conditions plays into SA French’s business strategy going forward.
The company predicts the next big spend will come from the civil engineering sector of the industry and has seen increased demand from the mining sector.
"We anticipate that civil will be a combination of outright purchase and rental, with the rental units being used mostly for the short-term contracts," comments van Breda.
SA French has seen a change in trends with equipment being rented by developers, with telehandlers becoming a common sight on sites.
The reason for the increased use of telehandlers is wider choice and people’s ability to try before they buy, he says.
"About 11 manufacturers offer telescopic; this is up from five," he says. "That means people want to test their functionality before they purchase. Similarly, smaller contractors that only require the machine for a week and cannot justify capital expenditure opt for rental.
A telehandler in constant demand for SA French is the 4-t Merlo. Van Breda says the lifting capacity and boom length of the Merlo are the main determinants for its popularity.
"The 17 metre boom on the P40.17 means that on a construction site you are able to use it (with a concrete skip) to pour columns."
van Breda says his company’s rental fleet has increased to meet demand and will continue building on its fleet to provide new machines with a short lead-time.
The company has invested ZAR50 million (USD6.4 million) in rental machines and this includes tower cranes, telehandlers and hoists.  Merlo telehandlers in demand |
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