Subsea engineering firm Neptune Marine Services has sold its Henderson-based fabrication division to privately-owned Kempe Engineering for approximately $400,000.
Under terms of the agreement, Neptune will retain its existing lease commitments at Henderson through to their expiration in September next year.
Neptune first flagged the possibility of selling of its fabrication arm following a review of its operations in February.
The review found the out-sourcing of Neptune’s fabrication capabilities would be more cost-effective than for the operations to remain in-house.
Neptune said its fabrication business had contributed to operating losses for the past two financial years, and was forecast to do so again this year.
Chief executive Robin King said the offloading of the division was a significant milestone in the company’s restructuring efforts.
Mr King said the strengths of the fabrication business would be better utilised by an engineering specialist such as Kempe.
“Neptune has entered into a strategic relationship with Kempe Engineering that will allow us to maintain access to the operational capability in the fabrication business which allows us to continue to offer integrated design and fabrication packages in conjunction with Kempe Engineering,” Mr King said.
“Across our business we are increasingly looking to use third-party relationships to access skills and assets rather than spreading our own capital across a broad base.
“By working with these specialists, rather than competing against them, there is scope to grow revenue in new markets.
“By selling the fabrication business, we have also removed the ongoing operating losses it was generating and it allows us to focus on growing our profitable divisions.”
At 11:37AM (WST) Neptune’s stock was steady at 2.4 cents.
