THE 2017 MELBOURNE TOP 50 COMPANIES REVEALED: NUMBERS 40 TO 31
Written on the 29 May 2017 by Ben Hall, David Simmons, Paris Faint, Yasmin Bonnell
The companies which made this Top 40 in our 2017 Top 50 Melbourne companies list include some pure retail players, a gold miner, a giant that sells paint, a company that removes hazardous waste, a telecommunications provider and a couple of tech plays.
The two tech companies are among the market darlings with revenue and sales growth on a sharp upwards trajectory, while only one of three retailers has been regarded highly by analysts in the face of fierce competition in the sector and the pending arrival of US behemoth Amazon.
31. DULUXGROUP LIMITED (DLX)
MELBOURNE paint supplying business, DuluxGroup, has gained access to the European market thanks to its recent acquisition of a small UK based paints business Craig & Rose.
Though Craig & Rose is relatively small, the acquisition is clearly strategic for the company and allows them access to manufacturing capacity, chemists, and development resources.
Its half yearly results were solid, with sales up by 3.5 per cent to $881million and NPAT rising by 14.2 per cent to $72.7 million.
CEO Patrick Houlihan says the company will continue to benefit from a robust home renovation and DIY market and expects a slowdown in Australia's housing market will have little effect on sales in the future.
32. NUFARM LIMITED (NUF)
IT'S been a massive turnaround for Nufarm after experiencing a heavy loss in 2015 due to restructuring costs. The Agricultural chemical firm reported a half year profit of $20 million after taking a $91 million loss in the prior corresponding period.
The restructuring took place over 18 months and cost more than $100 million but it has clearly paid off with revenue up by 15 per cent on the prior corresponding period to $1.36 billion.
CEO Greg Hunt said the results demonstrate that changes made to the business are delivering positive outcomes and helping to build a platform for continue profitable growth.
Hunt said although the industry is competitive, the company remains on track to deliver improved earnings for the full year if normal seasonal conditions are experienced in the major cropping regions.
33. OCEANAGOLD CORPORATION (OGC)
MATERIALS/METALS AND MINING
SHAREHOLDERS in OceanaGold have endured something of a rollercoaster ride recently, after reports emerged that the Didipio mine was threatened with suspension by the Philippine government in February.
Didipio has been the subject of wrangling between OceanaGold and the government which has also previously indicated it was considering closing the mine because of environmental concerns.
Despite these issues, the Canadian-Australian gold miner reported record high production levels of gold production and a quarterly revenue of $161.8 million.
34. GROWTHPOINT PROPERTIES AUSTRALIA (GOZ)
ACQUISITIONS have driven growth for Growthpoint Properties Australia but UBS analysts are saying this might not be sustainable in the long term.
The company took over the $315 million GPT Metro Office Fund last year and followed that with the purchase of a $160 million office tower in Melbourne.
The GPT Metro Office Fund deal was the biggest that Growthpoint has undertaken and it has also tapped the US debt markets. In March 2017, the Company raised $208 million in a private placement in the US which was four times oversubscribed.
The company's mantra is to "be a pure landlord with 100 per cent of our income derived from rent under leases to quality tenants from commercial real estate" and it has 59 properties with a portfolio value of $3.1 billion and 98 per cent occupancy.
35. MYOB GROUP LIMITED (MYO)
SOFTWARE & SERVICES/INFORMATION TECHNOLOGY
MYOB Group began 2017 with a bang thanks to some strong headline numbers for the full year ending 31 December 2016 including a rise in net profit of 25 per cent to $56.6 million and a revenue increase of 13 per cent to $370 million.
Online subscriber growth for the accounting platform provider was also impressive with a 47 per cent increase to 249,000 and it has positioned itself as the market leader in the small to medium enterprise (SME) sector.
Its strength lies in its traditional market of Australia and New Zealand but it also has a strong presence in other parts of the world and is taking on the likes of Quickbooks in the US, Sage in the UK and New Zealand's Xero.
MYOB sells products that are good and relatively inexpensive and it has forecast double digit growth this year.
And for the ninth consecutive year, IRESS' XPLAN solution was voted the number one financial planning software in Australia.
36. IRESS LIMITED (IRE)
DIVERSIFIED FINANCIALS/FINANCIAL TECHNOLOGY
IRESS Limited had a strong year with operating revenue increasing by eight per cent for the calendar year in 2016 and the fintech company says it expects strong revenue and profit growth to continue into 2017.
In the past few years, IRESS has picked up three junior fintech companies including Financial Synergy, Pulse and Proquote which all supplement its market-leading data business which is aimed at financial markets and wealth management.
IRESS has solid financials and future growth but it is an expensive stock and trades at around 33X times earnings.
IRESS says it has not been impacted by the UK's decision to leave the European Union, though they were marginally impacted by the dip in the British pound.
37. CLEANAWAY WASTE MANAGEMENT LIMITED (CWY)
COMMERCIAL & PROFESSIONAL SERVICES/HAZARDOUS WASTE MANAGEMENT
CLEANAWAY began 2017 with the sale of two major landfill sites in Melbourne's west for $22 million to the Pelligra Group, which will remediate and monitor the sites.
Cleanaway operates several landfill sites in Melbourne, including a large facility in Clayton and the Melbourne Regional Landfill tip in Ravenhall on the city's north-west outskirts.
The company picked up a new contract with Chevron and from 1 July 2017 it will provide waste management services to the energy company in Western Australia.
The company has faced environmental issues and in April it was fined $650,000 following a chemical fire in Adelaide which caused an employee to be injured.
38. PREMIER INVESTMENTS LIMITED (PMV)
PREMIER Investments had a solid first half in an incredibly difficult retail environment and because of speculation about the earnings risks for Australian retailers, the company decided to update the market in advance of its half-year results announcement in March.
The fashion retailer trading update adopted the pro-active measure to calm investors and when its half year results were finally released, its share price surged 7 per cent on the day.
The company which sells brands like Smiggle, Peter Alexander and Just Jeans is one of the few retail companies that analysts actually like right now. Smiggle has 272 stores in Australia, New Zealand, UK, Singapore, Malaysia and Hong Kong.
One of Premier's major investments, Smiggle reported a sales increase of 26.4 per cent.
Smiggle, which has opened one store a week for the past 12 months, is due to enter the Eurozone market soon with the company's first store in Ireland.
Chairman Solomon Lew said he was impressed with the resilience of the company despite the sentiment being generated by a series of high profile retail failures in the face of the Amazon threat and a highly competitive market.
"These results were achieved in a half that saw several Australian discretionary retailers go out of business whilst others have reported significant decline in earnings," says Lew.
39. VOCUS GROUP LIMITED (VOC)
AFTER a stellar half year result in February, Vocus Group shocked the market with a profit warning that it was going to wipe $100 million off its revenue target.
That May announcement sent shares into a 30 per cent freefall, and the owners of iPrimus and dodo blamed a range of issues including revenue delays on major project contracts and lower earnings from its recently launched New Zealand energy retail business.
The big question now is: does this make Vocus a takeover target?
It all seems a little surreal as Vocus Group's first half numbers included a 400 per cent rise in revenue and a 95 per cent surge in statutory profit.
The company purchased Amcom in 2015, M2 in February 2016, and Nextgen Networks in October 2016, and all of these helped contribute to the $888.2m in revenue.
Vocus will begin the construction of a $228 million undersea internet cable connecting Perth and Singapore this year. The project is in direct competition with the rival INDIGO cable system, backed by a consortium of tech and telco companies, including Google and Telstra.
40. PACT GROUP HOLDINGS LTD (PGH)
PLASTIC & METAL MANUFACTURER
The Pact Group has set its sights on becoming a billion-dollar player in the contract packaging market and signified its intent with the acquisition of the family-owned Pascoe Group for $41 million.
The acquisition was announced at the same time that Pact revealed a 20 per cent rise in net profit and followed on from the purchase of similar businesses, Jalco from Barry Smorgon and Australian Pharmaceutical Manufacturers.
It all means that more than 20 per cent of the company's revenue will be derived from packaging and led Raphael Geminder, who owns 40 per cent, to declare: "We can be a $1 billion player."
CEO Malcolm Bundey says Pact is one third of the way towards its hoped-for $1 billion target as it expands its packaging range which includes home care, food products, health and wellness and automotive products.
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Author: Ben Hall, David Simmons, Paris Faint, Yasmin Bonnell