Ausgroup's interim profit dips 11%

Engineering and fabrication company Ausgroup says the short-term outlook for the business will be challenging as it reports an 11 per cent dip in its interim net profit.

Kwinana-based Ausgroup, which trades in Australia as Ausclad Group of Companies but is listed on the Singapore stock exchange, said its profit fell to $10.8 million, down from the prior corresponding period's $12.1 million.

The net profit was on the back of record revenue for six months to the end of December 200, which increased by 28.8 per cent to $260.5 million. Its net operating cash flow was $33.4 million.

Ausgroup said the revenue growth was mainly due to the increased activity levels from the Australian business, particularly in the fabrication and construction side.

"However, due to some lower margin contracts, timing of variation approvals on particular projects and increased depreciation charges; the gross profit remained flat at AUD$32.0 million for 1HFY09," the company said.

"This resulted in the gross profit margin declining from 15.7% to 12.3% in 1HFY09."

Cash and cash equivalents at the end of the reporting period were down from $18.8 million to $10.7 million as a result of repayment of loans, leases and hire purchase of $23.1 million.

"The outlook for our business will be challenging in the short term as we deal with the fallout from the global financial crisis and a slowdown in the mineral and resources projects in our Western Australian market and the subsea equipment sector in Singapore," chief executive John Sheridan said.

"As a group we have taken steps to reduce costs across our business in response to the forward looking outlook. In addition we are reviewing our strategy in light of the changed global conditions.

"We remain positive on the outlook for LNG related opportunities for our Australian fabrication and construction services."