Heavy equipment supplier Emeco International, one of Western Australia’s largest unlisted companies, is assessing capital-raising options to support planned expansion.
Heavy equipment supplier Emeco International, one of Western Australia’s largest unlisted companies, is assessing capital-raising options to support planned expansion.
Managing director Laurie Freedman said Emeco, which posted a net profit of $17.4 million last year, had engaged Deutsche Bank to provide advice on its options.
He played down newspaper reports that Emeco’s majority US shareholder was looking to sell out, or that listed firm Coates Hire or Kerry Stokes’ WesTrac may acquire Emeco.
Instead, he said the focus was on supporting further growth in the business, which provides earthmoving and mining equipment across Australia and is expanding its international operations.
“The business is very significantly capital intensive,” Mr Freedman told WA Business News.
“We have had significant growth over the past four to five years and we are looking at ways of raising capital to support our customers.
“We have a presence in Indonesia, a ‘step out’ in the United States and have ambitions to get into Europe.”
Mr Freedman said the company was assessing all options, including private equity injections and an initial public offering, and it was “presumptuous” to assume the company was pursuing a trade sale.
He said it was likely to be another three months before a final decision was taken.
Mr Freedman declined to specify Emeco’s current ownership other than confirming its majority owner was in the United States and management held the balance.
Emeco’s latest accounts for the year to June, 2003, reveal a 37 per cent increase in turnover to $179 million and a 33 per cent lift in net profit to $17.4 million.
“For the third year in a row there was a pleasing increase in net profit,” the directors’ report said.
Revenue from sales of machines and parts rose 54 per cent to $88.8 million while rental revenue rose 33 per cent to $86.2 million.
Activity in the Queensland coal sector, a substantial contract on the Alice Springs to Darwin railway and a full-year contribution from its Indonesian venture all contributed to the higher revenue.
With mining and infrastructure investment continuing to enjoy buoyant growth during 2004, it is likely that Emeco has had another good year.
The published accounts highlight the capital-intensive nature of the business.
Investment in plant and equipment rose to $128.4 million with $33.8 million being spent on increasing the size and improving the quality of its rental fleet.
Its rental fleet has more than 300 items of earthmoving and mining equipment. The average level of inventory also increased during the year to $58.8 million reflecting the expanded marketing activity in its sales and parts business.
In the past the company has relied on operating cash flow and borrowings to fund its expansion.
John Court, best known today for his property activities including Glen Iris Estate in Jandakot, originally established the Emeco business in 1972 before selling in 1996.
