18/02/2013 - 12:36

Clough says outlook never been stronger

18/02/2013 - 12:36

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Clough boss Kevin Gallagher.

Engineering and construction group Clough is tipping a bumper year ahead after announcing a 139 per cent increase in net profit for the half year to December 31.

Clough lodged a net profit of $43.2 million for the period, while revenue was up 42 per cent to $660.3 million.

Underlying earnings before interest and tax (EBIT) were up 196 per cent, to $38 millikon.

As of December 31, Clough’s order book was around $2.5 billion.

“This encouraging result has been supported by a group-wide focus on improved performance,” managing director Kevin Gallagher said.

“Company initiatives focused on delivering excellence in project execution, cost efficiency and enhanced productivity have started to improve the business, providing a strong foundation for growth in the coming year."

Mr Gallagher said Clough had a record order book and a strong tender pipeline, which will ensure further solid growth over the next financial year.

“The outlook for Clough has never been stronger … our strong balance sheet and cash position provides the flexibility to pursue growth options in the coming year,” he said.

The group's EBIT margin was 5.8 per cent in the half-year, well up from 3.7 per cent last financial year.

Mr Gallagher said Clough was targeting an EBIT margin of 5.5 per cent in the next two years but was aiming for a 7 per cent margin in the longer term.

"Much of that gain will come from focusing on efficiencies in our operating groups," he told WA Business News.

The company has already cut corporate overheads, achieving annual savings of $10 million per year.

Mr Gallagher said another longer term goal was to diversify into the mining sector; currently, 94 per cent of its earnings are exposed to the LNG sector.

At 12:30PM, WST, Clough shares were up nearly 2.6 per cent, trading at $1.19.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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