OKOTOKS, Alta. – Mullen Group chairman and CEO Murray Mullen believes “the worst appears to be over” in western Canada’s energy sector, but a lack of capital investment and other Covid-19-related pressures continue to dampen results for one of Canada’s largest fleets.
“With rising commodity prices there is at least some reason to be more constructive that the industry and business activity will recover from current lows,” he said, when releasing results for the quarter that ended June 30. “Until then the base of our business remains strong and profitable, once again reinforcing that diversification is one of the fundamental strengths of our organization.”
Changing consumer spending habits that have shifted toward e-commerce, for example, have helped the fleets’ LTL and warehousing business, the company says.
Mullen Group generated $257.5 million in consolidated revenue for the quarter, down $61.5 million compared to the same quarter in 2019. The LTL business dropped $10.5 million to $101.9 million, while the logistics and warehousing segment dropped $19.3 million to $82.8 million. The specialized and industrial services segment faced the hardest hit – dropping $31.6 million, or 30.1% from the $73.5 million.
The overall drop in LTL business was a result of lower demand linked to Covid-19 and a lower fuel surcharge, but was partially offset by incremental revenue from the acquisitions of Argus Carriers and Inter-Urban Delivery Service, Mullen Group says. The logistics and warehousing segment faced similar pressures, but the revenue losses were offset by strong performance at Kleysen Group because of greater demand for transload services, as it expands serve offerings at its Edmonton distribution center.
The specialized and industrial services segment faced low oil prices, curtailed activity, and a poor drilling environment, along with lower capital spending and postponed maintenance. Still, those pressures were offset by greater demand for hauling linked to large-diameter pipeline and stringing services at Premay Pipeline Hauling, as well as improved results at Smook Contractors.
Mullen Group’s $55 million in operating revenue for the quarter, up $3.6 million over the same quarter in 2019, represented a $1 million increase (5.1%) in the LTL segment, $2 million increase (12.9%) in logistics and warehousing, and $1.7 million (9.4%) in specialized and industrial services.
The results also include Canada Emergency Wage Subsidy (CEWS) support in the form of $1.9 million for the LTL segment, $2.7 million for logistics and warehousing, and $6.3 million for specialized and industrial services.
“The past few months have certainly been challenging,” Mullen said, referring to downsizing associated with the economic downturn brought about by Covid-19.
The fleet laid off 1,000 employees in the previous quarter, and also suspended its dividend payments for three months, using the money to create a $5 million Family Assistance Plans to help employees before government support was available for them.
“Clearly this virus remains a threat to many in our community, requiring all of us to do our part.”
Credit: Source link