Emeco Holdings has announced plans to sell its Victorian infrastructure equipment rental business and focus its efforts on the mining industry.
After recently completing a six month review into its operations, the company has decided to focus on its core mining markets in Australia, Indonesia and Canada.
According to Emeco chief executive Keith Gordon, the decision to end some of its operations was due to soft market fundamentals and changing market structures.
“For this reason, in addition to previously announced rationalisation of our businesses in the US and Europe, we intend to divest our Victorian Rental business,” he said.
“We will also downsize and realign the Australian Sales and Parts businesses immediately.”
Gordon expects this will free up around $60 million worth of capital by the 2011 financial year.
“By taking action to free up capital from these underperforming businesses and refocusing on our core markets, the group is well placed to capture profitable growth opportunities and deliver improved shareholder returns,” he said.
“The capital employed in underperforming businesses has been a significant drain on the overall performance of the group in recent years and we will now be able to move forward without this impediment.”
The US and European closures and restructures are expected to incur charges of around $30 million.
The company said this was inline with the guidance of $29.5 million.
The sale of the Victorian Rental business and restructure the Australian Sales and Parts businesses will give rise to goodwill impairments of approximately $37 million and other impairment and restructure charges of up to $6 million.