SEDGMAN SHARES RISE AS HALF-YEAR PROFIT ANNOUNCED
Written on the 26 February 2015 by Antony Scholefield
SHARES in mining infrastructure company Sedgman (ASX: SDM) rose sharply today as the Brisbane-based outfit announced a half-year profit of $4.7 million.
Having turned around a $6.7 million loss in the corresponding period of 2013, Sedgman has declared a fully franked interim dividend of 3.5c per share.
Shares in the company reached a high of 74c on the morning of the announcement, after closing at 58c the previous day.
Chairman Rob McDonald says increased revenue and lower costs allowed Sedgman to weather the "uncertain environment in the mining services sector."
Sedgman decreased its overhead costs by 32 per cent in the half-year to December 2014.
CEO Peter Watson (pictured) says the reductions came from a business restructure and greater low-cost sourcing capability in China.
"We secured $300 million of project contracts, and are well positioned on three core operations contract renewals valued at over $100 million," he says.
"Our diversification strategy continues to gain traction with our work-in-hand and order book remaining balanced across commodities and globally.
"We expect the market to remain at subdued levels of activity in our core sectors and locations, but remain confident that our track record and strength position us well."
Sedgman also reduced its debt compared to the first half of 2014, from $21.3 million to $18.5 million. However, revenue from operations fell as three sites were either closed or transitioned back to owner operations.
In October 2014, Sedgman was awarded a $36.7 million contract for a Baralaba coal mine expansion, in Queensland's Bowen Basin.
Final approval of the construction component is expected soon, with the upgraded facilities set to be completed in December 2015.
Author: Antony Scholefield