AUSTIN ENGINEERING'S 'TOUGHEST' PERIOD HITS BOTTOM LINE
Written on the 29 February 2016
AUSTIN Engineering (ASX:ANG) has suffered its poorest results during a six-month period on record with a half-year loss of $22 million.
Although down from its loss of $41.6 million a year earlier, the previous result included a $40.9 million impairment following subdued capital expenditure in the mining industry.
The Brisbane-based mining equipment manufacturer has turned its focus to the repair and maintenance side of the business as a result, launching dedicated operations around the world to manage the shift.
Despite the lower margin in comparison to traditional business lines, revenue increased 6.5 per cent to $108.7 million driven by the repairs business.
Austin Engineering CEO Michael Buckland says capital spending continues to be deferred as clients look to cut costs, even if equipment becomes uneconomical not to replace.
"The last six months have seen the toughest period in the life of Austin Engineering with the miners deferring everything they can regarding capital equipment replacement and costs," Buckland says.
"While the result is the poorest recorded over a six-month period, the company has addressed this by the closing of the Brisbane facility, increased focus on offsite and onsite repairs and maintenance, as well as new product offerings to the market.
"The company has continued to address the current situation through the closure of over-capacity, introduction of new products, innovative finance packages, increased focus on repairs and maintenance and working to become our clients strategic partner in relation to our products.
"The company is positioned to increase revenue and market share in the current depressed conditions and gives a higher base when the market does recover to any increased level."
The group's normalised EBITDA was down 58 per cent to $3.8 million underpinned by Australian operations, particularly in Perth. The eastern states continue to be impacted by the depressed state of the coal industry.
Operations in Indonesia and the Americas had a subdued half, with several major orders being deferred.
No dividend has been declared.