26/08/2008 - 12:44

Emeco's 'tale of two halves' for profits

26/08/2008 - 12:44

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The managing director of earthmoving and mining equipment supplier Emeco Holdings Ltd has described the company's full-year performance as a "tale of two halves" as it booked a net profit decline of 10 per cent.

The managing director of earthmoving and mining equipment supplier Emeco Holdings Ltd has described the company's full-year performance as a "tale of two halves" as it booked a net profit decline of 10 per cent.

The company today reported a net profit result for the 2008 financial year of $68 million while net profit for the second half of the year was up 21 per cent to $37 million.

"Whilst we are disappointed with the lower earnings in 2008 compared to 2007, we characterise the 2008 performance as a tale of two halves and consider this result a factor of adverse short term events impacting the business over the first nine months of the year," managing director Laurie Freedman said in an Open Briefing interview.

He said during the first six months of the year, Emeco's profitability was affected by some weather related one-off or special events.

That included the a cyclone in the Pilbara region, drought in south east Queensland which affected the Tarong power station and flooding in Queensland's Bowen Basin and the Hunter Valley and Newcastle in New South Wales.

"Offshore, there was a change in conditions in Indonesia and continuing start-up losses in the US that also impacted our results. All these events had a negative impact on our asset utilisation in the first six to nine months of the year, but we finished very strongly," Mr Laurie said.

He added that the increased performance in the second half of the year reflected a step-up in operations in Australia, Indonesia, Canada and the United States, with the latter country becoming profitable in the second half.

Revenue over the full-year period increased by 11 per cent to $617.9 million while earnings before interest, tax and amortisation was down 6.4 per cent to $120.3 million.

The company's full year operating cash flow increased 75 per cent from $6 million to $168 million, driven by a significant reduction of working capital in the second half of the year.

The company's board has confirmed its FY09 net profit guidance of $75-$81 million and declared a final dividend of 2.5 cents.

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