26/08/2015 - 14:08

Lean times for local contractors

26/08/2015 - 14:08

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Perth-based contractor Decmil Group has outperformed most of its peers, reporting a relatively small dip in profit after lifting revenue to record levels, while Southern Cross Electrical Engineering has slumped to a loss after restructurng the business on the back of challenging conditions in the resources sector.

Lean times for local contractors

Perth-based contractor Decmil Group has outperformed most of its peers, reporting a relatively small dip in profit after lifting revenue to record levels, while Southern Cross Electrical Engineering has slumped to a loss after restructurng the business on the back of challenging conditions in the resources sector.

Decmil, which provides design, civil engineering and construction services for the resources and infrastructure sectors, reported an 18.9 per cent slide in net profit to $40.3 million for the 2015 financial year, with revenue up 7.9 per cent to a record $666.2 million.

It declared a final dividend of 8.5 cents per share, to bring its full-year payout to 13 cents.

“Despite a challenging year for the construction and engineering sector, it has been another busy and productive year at Decmil,” chief executive Scott Criddle said.

“During FY15 Decmil experienced a big shift in focus from private to public sector expenditure and this is likely to remain a feature of the business over the next couple of years.”

According to the company’s annual report, Decmil has reduced its workforce by 44 to 620 employees over the year.

Looking ahead, Decmil expects to continue to face significant headwinds in the construction industry over the next year as the resources industry transactions to an operational phase.

Meanwhile, SCEE has dipped into the red with a net loss of $9.8 million for the financial year, with revenue up 9.2 per cent to $238.3 million.

After adjusting for $11 million in impairments, the group’s underlying net profit was $4.2 million, with underlying revenue up 10 per cent to $240.6 million.

SCEE declared a final dividend of 2.7 cents per share, fully franked.

In a statement, the company said it faced highly competitive tendering, lower margins and commercially-focussed clients, along with a reduction of work in segments of the market - all of which contributed to the loss.

Interim managing director Chris Douglass said while it was disappointing to report a loss in 2015, the company entered the new financial year with high activity levels and was trading profitably with a strong balance sheet and healthy order book.

“Having implemented our restructuring initiatives during the year, the company is more appropriately sized and structured to operate efficiently in the current market conditions,” Mr Douglass said.

“The board remains committed to growing the company and we have surplus cash available to take advantage of opportunities that arise.”

SCEE had an order book of $111 million at June 30 with an estimated $30 million in contract extensions not yet included, and was looking to build on its 1,000-strong workforce.

That being said, the company said it was still exploring the possibility of entering into other revenue streams.

Decmil shares were 7.7 per cent higher to $1.04, while SCEE shares rose 10.2 per cent to 37.5 cents each at 2pm.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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