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

CROMWELL TRADES STEADILY IN FIRST HALF

CROMWELL Property Group has maintained a steady operating profit at $0.045 per security in the first half of FY17,...

WHY NEXTDC'S STOCK IS SOARING

AFTER posting its interim result, NEXTDC (ASX: NXT) gained more than 12 per cent on the stock market before noon.
...

PWR PROFIT CRASHES AS DOLLAR RISES AND COSTS MOUNT

A RISING Aussie dollar has offset PWR Holdings Limited's (ASX:PWH) overseas growth in the last half, forcing a...

SUPER RETAIL GROUP RESULTS SHINE ACROSS THE BOARD

A WELL-planned and executed half has paid off for Super Retail Group (ASX:SUL) as it posts a net profit result up ...

Related News

EVERYTHING YOU NEED TO KNOW ABOUT THE NATIONAL BROADBAND NETWORK

THE National Broadband Network (NBN) is more than an internet connection, it is an opportunity to transform your b...

WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES

EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent prem...

RISE OF THE MACHINES HAS WORKERS SWEATING

UP TO 3.8 million Australian workers are fearful their job may soon be terminated by a robot, a new survey has shown....

LESS TALK, MORE SMALL BUSINESS ACTION IN 2017

THE future growth and prosperity of Australian SMEs could be undermined if governments lose sight of the sector...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter