18/11/2014 - 11:27

Programmed profit down on less work

18/11/2014 - 11:27

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Burswood-based Programmed Maintenance Services has recorded a drop in after-tax profit for the six months to September to $9.8 million as a result of a continued fall in available work in the resources sector.

Programmed managing director Chris Sutherland.

Burswood-based Programmed Maintenance Services has recorded a drop in after-tax profit for the six months to September to $9.8 million as a result of a continued fall in available work in the resources sector.

The staffing, maintenance and project services company’s profit was 21 per cent higher this time last year, at $12.4 million.

Programmed said profit was hit by $2.3 million worth of non-trading items including: a final payment of $1.4 million for its acquisition of the specialist turf business Turnpoint, which was flagged in July; $900,000 in cost restructures; and $300,000 for the company’s share of the net loss by its associate start-up online recruitment business OneShift.

In October last year, Programmed invested $5 million in OneShift for a 27.5 per cent equity stake.

The company recorded a dip in revenue to $716.9 million, down from $723.6 million a year ago.

In a statement, Programmed said earnings before interest and tax by its property, infrastructure and resources divisions were in line with the previous year, but lower earnings by its workforce division resulted in an 8 per cent decline in group EBIT to $20.6 million.

Programmed managing director Christopher Sutherland said the company was at the coal face of significant change across the economy.

“The parts of the economy built on the back of large blue collar workforces remain under cost pressure, and these customers are seeking lower prices and placing pressure on service provider margins, including our task-based maintenance and workforce services,” he said.

“In response to lower-cost imported goods, online sales/digital disruption, and rigid labour laws, many of these customers are restructuring their business, including investing in technology, offshoring some functions to lower labour costs and outsourcing non-core activities.”

However, Programmed saved $3 million in interest payments as a result of a reduction in its net debt to $24.3 million.

That figure is 42 per cent lower than its net debt of $42.2 million recorded in March.

Mr Sutherland said while the workforce division was being hit by changing trends in the economy, demand was growing for Programmed’s services in the health, aged care, education, tourism and recreation economy divisions.

“The growing population is requiring new assets to be built and increasingly governments at all levels are looking for privately funded and managed solutions, creating further opportunities for Programmed,” he said.

The company said it retained a strong net operating cash flow of $36.1 million, and was determined to increase its interim dividend by 8 per cent to 6.5 cents per share fully franked.

Shares in Programmed were 1.1 per cent lower at $2.68 per share at 11:20am. 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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