Kwinana manufacturing company Ausclad Group has reported its biggest profit and completed its second acquisition in a year after taking the unusual step of listing on Singapore’s SESDAQ stock exchange.
Kwinana manufacturing company Ausclad Group has reported its biggest profit and completed its second acquisition in a year after taking the unusual step of listing on Singapore’s SESDAQ stock exchange.
Ausclad raised $6.7 million ($S8.1 million) when it became the first Australian industrial company to list in Singapore, in April last year.
More fundamentally, the listing helped Ausclad build links in the Asian region where it sees many growth opportunities.
“We formed a view that we needed to look globally,” managing director Stuart Kenny told WA Business News.
“Our company was shaped by the downturn [in 2000] and the difficulties that we saw in relying on Australia.
“We saw that we couldn’t just be the same as everybody else.”
Since 2000, Ausclad has made several gutsy strategic moves that have catapulted the company ahead of its traditional competitors.
These moves, combined with strong demand for its engineering and steel fabrication services, have helped to deliver a strong lift in financial performance.
The group achieved a 65 per cent increase in net profit to $11.3 million for the year to June 2006 and a similar increase in turnover to $240 million.
Ausclad anticipates an even stronger result in the current financial year, helped by its recent $12.7 million acquisition of Singapore company Cactus Engineering.
Cactus provides specialist machining and fabrication services to the oil and gas industry, providing both geographic and sectoral diversification for Ausclad.
“That’s going to provide an enormous opportunity for growth and will allow us to benefit from the emerging sub-sea [oil and gas] expansion.”
The Cactus acquisition followed last year’s $4.8 million purchase of local fabrication firm Seagate Structural Engineering.
In the Australian market, new contracts have lifted Ausclad’s order book to $155 million.
Recent wins include a $32 million contract for the fabrication and construction of CSBP’s new ammonium nitrate manufacturing facility.
Ausclad has also won several big contracts associated with the expansion of BHP Billiton’s and Rio Tinto’s iron ore operations.
Other clients have included Roc Oil, Apache Energy and nickel miner Minara Resources.
Two relatively small contracts illustrate Ausclad’s pursuit of more complex and challenging work.
One of these was a contract to design and fabricate an offshore production jacket for Shell Todd New Zealand’s Pohokura oil project.
This became the first ever export of an oil production jacket from Australia.
The second notable project was the fabrication and assembly of Natural Fuel Ltd’s $45 million biodiesel plant.
Project engineer Lurgi had originally planned to build the plant on-site at Darwin but was convinced to assemble it in modular form in Perth and tow it to Darwin on a barge.
Ausclad has the capacity to take on large, complex projects only because it made what Mr Kenny admits were two risky investments.
The first was the acquisition of multinational ABB’s large Kwinana workshop at the bottom of the last big downturn in 2000.
“We took on a huge task to purchase that facility and grow our business on the capacity that gave us.”
He acknowledges that Ausclad went through two difficult years after the ABB purchase but believes it was crucial in setting up the group for its recent growth.
Mr Kenny said Ausclad also benefited from recruiting many experienced workers during the downturn.
Three years ago, Ausclad further expanded its capacity by leasing the giant assembly hall at the Australian Marine Complex at Henderson, which was built with nearly $200 million of state and federal government money.
Mr Kenny believes the fabrication and assembly of process modules provides one of the big opportunities for Ausclad, which has invested in modern technology to remain competitive with Asian fabrication yards.
Ausclad has signed a third term-lease giving it use of the AMC’s assembly hall out to 2008, but Mr Kenny believes other industry players will be increasingly keen to access the facility.
“There is a chance that the whole complex may eventually be too small,” he said.
“The ability to service mining as well as oil and gas will start to be developed.”
Mr Kenny said Australia will remain the company’s base, and he expects the resources and energy sectors will remain strong for several years.
He is also keen to integrate the skills of Ausclad and Cactus so the combined group has greater capabilities, particularly as it pushes into the sub-sea oil and gas sector.