Ausgroup’s profit slips

Kwinana-based engineering and fabrication company Ausgroup Ltd has reported a fall in annual profit despite achieving a big increase in revenue and having a record order book.

Ausgroup, which trades in Australia as Ausclad Group of Companies but is listed on the Singapore stock exchange, said its profit fell 4 per cent to $48.2 million.

Ausgroup revealed net profit was affected by four key issues - below forecast project variation settlements, execution difficulties, disappointing revenues from its Asian operations, and reduced margins within the engineering division in Australia.

"We are taking a conservative approach and the group does not recognise any revenue for work done under variation where the outcome of the variation is uncertain...we are expanding rapidly and there continues to be a shortage in the market for certain skilled personnel," Ausgroup managing director John Sheridan said.

Despite these issues, the company registered revenue growth in both the engineering and services divisions of 24 per cent and 91 per cent respectively.

Strong market conditions in Australia meant the domestic market accounted for 94 per cent of Ausgroup's revenue. Australian revenue increased 41 per cent to $354.8 million.

Ausgroup's order book currently stands at $296 million, an increase of 27 per cent from last year, indicating there are no issues in securing new contracts.

Revenue in the group's Singapore operations dropped by 16 per cent to $24.2 million due to a disrupted capital expansion exercise.