MIXED RESULTS CURB WATPAC'S PROFIT

Written on the 24 February 2015

MIXED RESULTS CURB WATPAC'S PROFIT

WEAKER commodity prices have hampered Watpac Limited's (ASX:WTP) half year profit, despite strong performance from its contracting businesses.

The construction and mining services company reported a net profit after tax of $6.2 million for the first half of FY15, compared to $7.4 million in the previous period.

An increase in contracting revenue to $450.8 million was offset by a decline in mining revenue of $143.7 million, in comparison to $147.7 million in the first half of FY14.

Watpac managing director Martin Monro (pictured) says the results are a reflection of the group's long term strategy amid mixed operating environments.

"The strength of the construction industry has seen Watpac's contracting businesses perform extremely well over the past six months," Monro says.

"This markedly improved financial performance is reflective of our national approach to construction activities, combined with strategies we have put in place to further strengthen our balance sheet and build on our client relationship capabilities.

"Weaker commodity prices have hampered the mining industry which has resulted in reduced profitability for all operators in the sector."

Looking ahead, Monro says the company will deliver solid growth with more than $250 million in new contracts and extensions in the pipeline.

The total forward order book is valued at $1.2 billion, including the $24 million Ronald McDonald House project in South Brisbane.

"With the strength in contracting, and stabilising results in mining and civil we remain confident in our guidance of an underlying net profit result broadly in line with last year, and a further strengthening in our balance sheet position," Monro says.

Watpac has $162 million in cash and term deposits, while debt has been reduced to $56 million.

WTP will pay an interim unfranked dividend of two cents per unit on March 27.


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