GR Engineering raises profit by 89%

Belmont-based contractor GR Engineering Services lifted its full-year profit by 89.3 per cent to $14.2 million, despite a drop in revenue of 0.4 per cent to $114.2 million.

GR Engineering said it survived the difficult trading environment with a greater contribution of overseas revenue, particularly in the ore sector, the winning of repeat business and through acquisitions made in the past 12 months.

The company held cash and net receivables of $50.5 million, which has been used to increase its final dividend to 4 cents per share, bringing the full-year dividend payments to 7 cents per share.

“It is pleasing that despite a continuation of difficult trading conditions for the mining services sector generally, GR Engineering was able to deliver strong growth in profitability and improved returns to shareholders in FY14,” GR Engineering managing director Geoff Jones said.

“Growth through geographical expansion and increasing the company’s presence in the iron ore sector remain important aspects of the company’s growth strategy.”

GR Engineering said it had about $110 million in contracted revenue for the next financial year, mostly resulting from contributions from Wolf Minerals’ Hemerdon Tungsten and tin mine in the UK, and its Moisture Reduction project at Rio Tinto’s Greater Paraburdoo operations.

The company said the Hermerdon Tungsten project was valued at about $140 million and was the largest project undertaken by GR Engineering to date.

In December last year, GR Engineering bought independent operations and maintenance firm Upstream Production Solutions for $5.75 million, which it plans to use to source growth from the oil and gas sector.

“Negligible debt, relatively small ongoing capex requirements and consistent profitability have contributed to the maintenance of a strong balance sheet and in particular a robust working capital position thereby enabling the company to not only fund internally the acquisition of UPS, but also increase returns to shareholders,” Mr Jones said.

GR Engineering shares rose by 8.6 per cent to 82 cents per share at 12:45pm.