Pluto dampens strong UGL profit

Diversified industrial services company UGL has reported a solid rise in annual profit and said it is well placed for continued growth in the 2012 financial year, with the only weak spot being its resources division.

Net profit rose by 9.7 per cent to $158.5 million for the 12 months to June 30, Sydney-based UGL said in a statement.

Most of the growth in earnings came from its rail division, which recovered from a poor 2010 result to post earnings before interest and tax (EBIT) of $84.8 million.

The infrastructure and services divisions also lifted their earnings, while the resources division suffered a fall in EBIT to $44.0 million.

The company noted in its presentation material that Woodside’s Pluto gas project was "impacting year-on-year EBIT", but did not provide details.

Pluto is a major contractor on the giant gas project, which has been hit by rising costs and delays as it moves close to completion.

Revenue increased 2.4 per cent to $4.29 billion.

The company declared a final dividend of 38 cents per share fully franked.

UGL said it expected full year 2012 to be a "positive growth year," but declined to offer specific guidance.

"Given recent economic developments throughout the world, UGL believes at this stage it is prudent that we do not give specific guidance until such time that the company can assess the impact of these developments," UGL's chief executive Richard Leupen said in a statement.

He said the company would continue its growth strategy of securing projects on acceptable commercial terms and maintaining the quality of its order book while focusing on obtaining long-term services contracts and construction and rail manufacturing projects.

The company was always assessing potential acquisitions but it would only pursue opportunities that made a "positive contribution" to shareholders in the short to medium term and build on the revenue base.

"UGL is in good shape," Mr Leupen said.

"With an excellent talent pool, a solid balance sheet which sets us apart, a growing international footprint, and an enviable blue-chip customer base, we again expect to deliver positive returns for our shareholders."

Mr Leupen said the 2012 full year result was the 10th consecutive year of profit growth.

"Building our services profile and a very strong focus on risk management have been the hallmarks for UGL in full year 2011 and they will be important future growth drivers," he said.

The company's order book remains at $8.2 billion, with more than 73 per cent of the order book made up of long-term recurring maintenance style contracts.

It also has more than $1.0 billion of work in the preferred tenderer stage and $7.7 billion of weighted and qualified opportunities.

This gave the company a stable revenue base for "a number of years," Mr Leupen said.

UGL said it had a deliberate strategy of securing and executing projects on commercial and balanced trading terms and during the year it had secured more than $4.0 billion of new projects and contract extensions.

Gearing was sitting at "historically low levels".

"UGL has a robust balance sheet and continues to assess acquisition opportunities in all of its key sectors," Mr Leupen said.