Investors + Media AusGroup’s 2Q FY2010 earnings at AUD$3.4 million
AusGroup’s 2Q FY2010 earnings at AUD$3.4 million
11 February 2010
AusGroup Limited (‘AusGroup’) today announced its results for the three months ended 31 December 2009 (‘2Q FY2010’).
Financial Highlights/Summary |
2Q FY 2010 (AUD$'000) |
2Q FY 2009 (AUD$'000) |
Change % |
| Revenue | 85,769 | 130,071 | (34.1) |
| Gross Profit | 13,951 | 15,313 | (8.9) |
| Gross Profit Margin | 16.3% | 11.8% | - |
| Other Operating Income | 2,433 | 1,504 | 61.8 |
| Expenses | (9,977) | (9,308) | 7.2 |
| Net Profit Attributable to Equity Holders | 3,373 | 4,995 | (32.5) |
| Net Profit Margin | 3.9% | 3.8% | - |
| Net Cash from Operating Activites | 13,680 | (198) | N.M. |
Revenue for 2Q FY2010 decreased by 34% to AUD$85.8 million mainly due to lower activity levels in the Group’s Australian manufacturing, fabrication and construction segments which experienced the delayed impact from the global financial crisis (‘GFC’).
The acquisition of Modern Access Services (‘MAS’) was completed in Q4 FY2009 and MAS recorded revenue of AUD$14.0 million for 2Q FY2010 compared with that of AUD$9.9 million for 1Q FY2010.
The Group’s gross profit declined by 9% in 2Q FY2010 to AUD$14.0 million, however gross profit margin improved from 11.8% to 16.3%. Margin increase was mainly due to finalisation of certain variation claims related to work undertaken within the Major Projects Construction division.
The other operating income increased by 62% to AUD$2.4 million in 2Q FY2010 mainly due to increase in interest income and supplier rebates.
Expenses for 2Q FY2010 increased by 7.2% to AUD$10.0 million due mainly to the additional expenses associated with recently acquired MAS. Excluding MAS related expenses, the expenses were stable compared to the corresponding quarter.
The Group’s net profit attributable to equity holders for 2Q FY2010 decreased by 33% to AUD$3.4 million.
Financial Position as at: |
31 Dec 2009 (AUD$'000) |
30 Jun 2009 (AUD$'000) |
| Property, Plant & Equipment | 101,924 | 94,385 |
| Cash & Cash Equivalents | 20,018 | 25,185 |
| Total Debt | 25,907 | 24,238 |
| Equity | 115,827 | 116,052 |
| Gross Gearing (Debt/Equity) | 22.4% | 20.9% |
| Net Gearing (Net Debt/Equity) | 5.1% | Net Cash |
The net cash generated from operating activities for 2Q FY2010 was AUD$13.7 million. The Group’s cash and cash equivalents stood at AUD$20.0 million as at 31 December 2009 with a low net gearing of 5.1%.
AusGroup’s Managing Director John Sheridan said,
“Our results are largely in line with our internal forecasting and reflect our previous statements to the market over the last few quarters.
We are continuing to see a longer tail to the Global Financial Crisis (GFC) than we anticipated.
Activity levels in the Western Australian mineral resources sector and the Singapore subsea equipment sectors remain well below 2008 highs. This will continue to challenge our business for the forward looking 6 to 12 month period.
Our other challenge has been the impact of the strong AUD on our Australian fabrication and manufacturing operations which has been challenged by low activity levels and strong competition from Asia. In response to this challenge we continue to implement a number of long term strategic initiatives to improve the performance of our Australian manufacturing business.
Our Group has performed well over the half with orders secured totalling A$280 million, from notable blue chip clients in BHP Billiton, Woodside, Apache Energy. We have maintained our Gross Margins and our balance sheet remains strong.
The contribution from our MAS acquisition continues to build nicely and we expect a solid second half contribution from this business.
Our FIX, BUILD, GROW strategy continues to deliver good consistent project performance, an improved safety performance and strengthening client relationships which position us well as the market conditions continue to improve over the next 12 months.”
Outlook
For the two sectors that AusGroup operates in:
Oil & Gas Sector - With bright LNG outlook in Western Australia, the Group is confident that demand for its Australian based services will improve over the next 12 months. For the Singapore side, the Group expects the next half of FY2010 to be similar to the first half and does not expect over 12 months a significant improvement in the activity levels.
Mineral Resources Sector - The Group notices a gradual but slower than anticipated recovery in the Australian mineral resources sector. This slower pace of recovery is due to the residual effects of the GFC and the Group foresees margin pressures in the next 2 quarters.
However, over a 12 month horizon, the Group expects an improving outlook in activity levels in this sector.
AUD Impact
The Group has observed the appreciation of the AUD against the USD and most Asian currencies since June 2009. This has impacted the competitiveness of the Group’s Australian fabrication activities relative to Asian based competitors. As a result the Group continues to face strong downward margin pressure and lower activity levels in this division. The Group continues to implement its productivity improvement program within its Australian fabrication operations.
Order Book
Overall, the Group has an order book of AUD$467 million as at end of January 2010 and is well positioned to continue to secure opportunities in the sectors it operates in for the next reporting period and the 12 month outlook.
Next Reporting Period
For the next reporting, the Group expects revenue levels to increase, however earnings are expected to remain weak due to lower than expected activity levels in Australian fabrication operations, timing related profit recognition issues on some projects and continued tight margin pressures across the business.
Note: The Group expects, from time to time, delays in the finalising of variations around certain types of construction projects. This will create a degree of variability in the Group results from quarter to quarter. The Group’s accounting policy is to recognise costs as they are incurred, which may not match revenue from variations, as these have to be negotiated (sometimes protracted) with clients. In accordance with the Group’s accounting policy, revenue is only recognised when the outcome of work done under variation is reasonably certain.
Additional Information
