OFFSHORE OPPORTUNITIES HELP BOOST MARKET SHARE

Written on the 22 March 2012

OFFSHORE OPPORTUNITIES HELP BOOST MARKET SHARE

CARDNO has increased its share of the market by exploring offshore opportunities.

Strong performance from US operations, improved conditions in Australia and acquisitions have produced a healthy return for Cardno (CDD).

The global infrastructure services consultancy recorded a $36.1 million net profit after tax for the six months to December 2011, representing a 14 per cent increase on the previous corresponding period.

“There was really positive growth at our businesses in Queensland and Western Australia that both performed strongly,” says managing director Andrew Buckley (pictured).

“Overall there was 8.4 per cent organic growth nationally. New South Wales and Victoria were a bit flatter, failing to produce as strongly because their clients did not dig so deep (into their pockets).”

CDD has worked on the Grantham town relocation and various road design and redesign matters along the Queensland coast. It expects the next round of work to come from the mining and gas boom. Cardno has increased its share of the market by exploring offshore opportunities.

“We targeted that market with our 2011 acquisition of geothermal engineering company Roadtest ($11.7 million) to enter the structural materials space,” says Buckley.

“Private sector development market has not come on-board yet, but it has potential to add another string to our bow.”

Revenue rose 2.1 per cent to $445.5 million compared with FY10, while earnings before interest, tax, depreciation and amortisation were up 12.3 per cent to $65.5 million in the same period.

Buckley believes CDD is increasingly chosen for its global perspective and environmental consulting on the 2010 BP oil-spill disaster in the Gulf of Mexico.

“Our North American operations have grown rapidly on the back of our strong environmental consulting business. We expect 9.5 per cent growth annually for the next five years,” he says.

The company has won a $22 million contract for an electrical and controls system infrastructure upgrade at the Rio Tinto-owned Tom Price, Paraburdoo and Channar iron ore mines in WA. Its construction materials testing businesses have secured more than $15 million in liquefied natural gas project work near Gladstone.

The company’s balance sheet is resilient with a debt-to-equity ratio of 42.5 per cent and $80.4 million in cash reserves as of December 2011. It is no surprise that Buckley is so confident about his US expansion plans.

“We are believers in the US market. We have chased that environmental consulting market for years. The US$106 million ($99.3 million) acquisition of Louisiana-based ATC Associates adds 1600 more staff and strong growth,” he says.

“However, we still find it is fairly difficult in China, India and other Asian countries to make sure you get paid all your money owing, and that nobody steals your intellectual property (IP). These have been issues in our dealings with Asia.

“Our preference is to attack it from Singapore or Hong Kong, where there is rule of law and a low-risk (trading) environment.

“There is no secret that in some of those markets there is not the same perspective on IP as in Australia. You only have to go to China and see the pirated DVDs for sale. We have seen people have difficulty in that regard and do not want that level of risk.”

Buckley confirms CDD has net debt equity of 20 per cent and gross debt of about $150 million.

“We have restructured out debt facility to not only involve HSBC but also Westpac, CBA and NAB for three to five years,” he says.

“We also earn all our revenues in the same currencies expended. We have raised debt in US dollars that serve as a natural hedge.”

The board declared an interim dividend of 18 cents a share, slightly up from the previous corresponding period, to be paid on April 4.

----------

TOP PUBLICLY LISTED COMPANY
16.
Cardno (CDD)
MD: Andrew Buckley
Market Cap: $822m
Revenue ’11: $831.2m
Profit ’11: $58.8m
Staff: 6400
Established: 1945

Read more about Brisbane’s Top 50 publicly listed companies in the annual Brisbane Business News top companies edition out now.

Comment on our Twitter page using the @BrisbaneBusines tag.


Latest News

FORMER MFS EXECUTIVES HIT WITH DISQUALIFICATIONS AND MASSIVE FINES FOR MISAPPROPRIATING FUNDS

FIVE key players involved in an investment company that collapsed in 2008 owing $2.5 billion have been ordered to ...

SURFSTITCH BATTLING FOR SURVIVAL

QUEENSLAND based online retailer SurfStitch Group has gone into a voluntary trading halt for three months after it wa...

STARTUP SUCCESS BOILS DOWN TO PERSONALITY, SAYS EXPERT

THOSE who own startups will know that there are many essential qualities of a good entrepreneur; their tenacity, fina...

THE AMBITIOUS PLAN TO TURN A COLLAPSED FRANCHISE INTO AN EXPANDING BUSINESS

AUSTRALIA'S newest master franchise is set to launch in October as a commercial cleaning operation, resurrecte...

Related News

STARTUP SUCCESS BOILS DOWN TO PERSONALITY, SAYS EXPERT

THOSE who own startups will know that there are many essential qualities of a good entrepreneur; their tenacity, fina...

SLATER AND GORDON TAKES SPOTLESS TO COURT

SPOTLESS Group (ASX: SPO) has been hit by a class action launched by Slater and Gordon (ASX: SGH) in the Federal C...

TOPSHOP GOES INTO ADMINISTRATION AMID VOLATILE RETAIL MARKET

TOPSHOP has become the latest in a string of retailers blasted by the volatile retail market, as the iconic fashio...

SIGMA'S SHARE PRICE TAKES A BATTERING AS IT LAUNCHES LEGAL ACTION OVER SUPPLY DEAL

SIGMA Healthcare (ASX: SIG) has taken the MyChemist and Chemist Warehouse chains to court to demand they continue to ...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter