Opus 1H profit slips 4.8% in weak, uncertain global economy
By Paul McBeth
Aug. 13 (BusinessDesk) - Opus International Consultants, the engineering firm with one of four mandates to lead design the rebuild of Christchurch city, reported a 4.8 percent drop in first-half profit, below expectations, in a weak and uncertain global economy.
Net profit was $10.8 million, or 7 cents per share, in the six months ended June 30, down from $11.3 million, or 8 cents per share, a year earlier, when earnings were bolstered by a tax credit, the Wellington-based company said in a statement. Sales increased 3.5 percent to $203.5 million. The shares fell 2.8 percent to $2.10 in trading today.
Pretax earnings of $14.4 million missed Forsyth Barr analyst Andrew Harvey-Green's $17.4 million forecast, which was based on a combination of the Christchurch rebuild getting underway, large Australian contracts and a profitable British segment.
"This is a good result for Opus, given continuing weakness and uncertainty in the global economy," chairman Kerry McDonald said. "Our base of long-term contracts has helped to underpin our performance and spread the risk in these challenging times."
The result is in contrast to rival Downer EDI, which more than doubled its New Zealand earnings from its infrastructure unit to A$29.6 million. Still, the Australian company warned the nation's tough trading conditions are being exacerbated by ongoing seismic activity in Canterbury.
Opus' New Zealand unit lifted first-half earnings before interest and tax 26 percent to $15.5 million, with a 1.7 percent increase in revenue to $144.7 million. It UK operation narrowed its operating loss to $624,000 from $775,000 a year earlier, with sales flat at $10.6 million.
The Australian unit slipped into the red with a loss of $967,000 due to a provision for a bad debt, even as sales rose 17 percent to $37.4 million. The Canadian business was flat, posting ebit of $518,000 on revenue of $10.8 million.
Chief executive David Prentice said Opus is looking for growth opportunities in the Middle East, North Africa and Asia.
Last year, Opus bought Coffey Rail for A$9 million in a bid to expand its footprint across the Tasman in a deal which was forecast to inject $1 million to the engineering firm's bottom line in the first full year.
The board declared a fully imputed interim dividend of 4 cents per share, up from 3.8 cents per share a year earlier.