AUSENCO SLUMPS, PREDICTS DELAYS
Written on the 20 August 2014
AUSENCO Limited (ASX: AAX) has reported a results slump but is confident in long term results as the company moves forward with a more global focus.
A $2 million net profit after tax in the half year to 30 June 2014 was a $1.5 million decline on the previous corresponding period.
A report released by the company revealed all financial performance measures were down from the same period last year, and AAX CEO Zimi Meka says revenue was below expectations seeing a 28.9 per cent decrease to $184 million.
However, Meka says all business lines remained profitable and there will be more opportunities as the company’s global footprint grows, despite delays with some projects for the time being.
He says delays are stemming from the strong Australian dollar, events such as the Ebola outbreak in West Africa, and challenges securing environmental, mining and social licences to operate.
AAX has been eyeing Canada as a key market for oil and gas, focusing on copper projects in Chili and Peru, and building infrastructure in North America for its LNG business.
“We are well positioned in these markets to convert the opportunities; however timing of decisions by owners is still difficult to anticipate,” says Meka.
“Consistent with our history, I expect our Australian revenues will continue to represent less than 15% of group revenues.”
Meka says overcoming challenges in the past year has leveraged the company to put it in a more favourable position going forward.
“We have seen a return to more normal market conditions and our strategic presence across key markets, coupled with our track record for delivering value adding solutions for our clients, is creating a solid pipeline of opportunities to increase market share and grow revenue and earnings,” says Meka.
“In particular, ongoing brownfield and sustaining capital programs provide ample opportunities for Ausenco to expand by leveraging our existing strengths and capabilities in this area.
“First half revenue was marginally below our expectations, which was attributable to a few offices that experienced delays with the timing of anticipated new assignments.
“Despite these challenges, all businesses were profitable during the period and our intensive focus on managing costs has resulted in a more efficient cost base which positions the business for leveraged earnings growth from the expected improvement in revenues through 2015 and into 2016.”
It is anticipated for an AAX 2014 net profit after tax between $3.5 and $7.8 million based on 2014 full year revenues between $370 and $395 million, with EBITDA tipped between $13 and $19 million.