AUSENCO DIGS INTO RED ZONE
Written on the 19 August 2015
AUSENCO (ASX: AAX) has reported a net loss for the half year, citing 'unpredictable' demand in China and Brazil as challenging operations.
The engineering, construction and project managers reported a net loss before tax of $12.4 million, down $2.7 million from the previous corresponding period.
Revenue was also down $37.8 million to $135.2 million for the half year.
Underlying EBITDA incurred a loss of $3.4 million, comparable to the second half 2014 loss of $3.2 million.
Ausenco CEO Zimi Meka says market volatility and economic uncertainty isn't helping the company, but he increased work on hand over the period as he looks forward with optimism.
"Looking forward, a number of recent significant contract wins, including preferred contractor awards, have lifted work on hand to $278 million from $133 million earlier in the year," says Meka.
"As testimony to our focus on managing controllable costs, despite a $38 million decline in revenues from the 2014 second half, we were able to maintain a similar underlying EBITDA performance during the first half of 2015.
"As a result of our improved earnings operational leverage, the prospects for a return to profitability from these levels are quite strong and the company is well placed to benefit from the improved revenue outlook."
Meka says the company has recently began work on new oil and gas projects, and is broadening its footprint through the recently minted strategic alliance with Spanish company Duro Felguera.
He notes the alliance bodes well with the recent shift in the resources industry towards project delivery on a full-service engineering procurement and construction (EPC) basis.
Meka also reports strong interest is coming from key commodities markets including gold, copper and nickel, evidenced by the company's nomination as preferred contractor on four new awards totalling over $600
million in the last few weeks.
"While oil & gas pricing volatility did impact our second quarter results, recent awards show signs of an improvement in this market. However, in the near term, the oil price is expected to continue to impact this service line," says Meka.
"We are, however, well placed to capitalise on the activity in the midstream space where clients continue to invest.
"Our strategic presence across key markets, coupled with our track record for delivering value to clients, is creating a solid pipeline of opportunities for us to increase market share and grow revenue and earnings."