Global Construction Services says its 2014 financial year earnings were hit by delays in major projects in the Perth CBD moving from approval to construction and a slowdown in resources-sector demand in the Pilbara, leading to a near-50 per cent fall in net profit.
Global Construction Services says its 2014 financial year earnings were hit by delays in major projects in the Perth CBD moving from approval to construction and a slowdown in resources-sector demand in the Pilbara, leading to a near-50 per cent fall in net profit.
GCS released its full-year results to market today, with revenue falling 20 per cent to $160.1 million, while net profit was down 46.8 per cent to $8.1 million.
The net profit result was hit by a $1.8 million pre-tax bad debt write-off relating to the collapse of engineering firm Forge Group.
Despite the falling profits, GCS was able to reduce its net debt to $63.6 million, a 22 per cent reduction on the previous year.
The company will not pay a final dividend as it focuses on reducing debts and dealing with widespread economic uncertainty.
GCS paid a 2 cents per share dividend in FY2013.
GCS said the challenging market conditions in its core divisions had been recognised by management.
“The board has continually responded by reviewing its operating segments and rationalising and aligning resources to match activity levels,” the company said in a statement to the ASX.
“Additionally, the company has continued to execute its strategy of diversifying its revenue base to more sustainable annuity streams which offer integrated labour and equipment solutions to customers over the long-term project life cycle.”
GCS said the pipeline of work for its commercial division remained strong, flagging increased activity in the second half of FY2015.
Over FY2014, GCS completed key contracts at the QEII Medical Centre car park for Probuild, as well as the Midland Health Campus for Brookfield Multiplex.
Works are ongoing at Brookfield Place Tower 2, the May Holman Centre refurbishment and the façade installation at the Perth Children’s Hospital.
GCS said its commercial arm recorded decreased revenue compared to the previous financial year because of continued delays in projects moving from approval to construction.
Total revenue for the division came in at $84.3 million, down from $110.5 million in FY2013.
In the resources sector, GCS said there was a steady improvement in utilisation over the last quarter of FY2014, but softening resources investment had resulted in a reduction in revenue.
However, the lower mining demand was partially offset by growth in oil and gas construction works.
Total revenue for GCS’s resources division was down to $50.8 million, from $69.4 million in FY2013.
Key contracts FY2014 included the delivery of 2,400 tonnes of equiplent for the CBI-Kentz joint venture at Chevron’s Gorgon LNG project and a management and supply scaffolding deal for Woodside Petroleum's North West Shelf Project’s onshore and offshore locations.
GCS Industrial Services was also appointed exclusive supply chain partner by Kaefer for its scaffolding package on Inpex’s Ichthys LNG processing plant in Darwin.
“It is pleasing that the oil and gas opportunities continue to remain buoyant and our businesses and existing integrated product and services offering are well placed to support future growth opportunities in this sector,” the company said.
GCS said the outlook for its residential construction arm was cautiously positive, after the wider WA housing market rebounded over the financial year.
Total revenue was $25.2 million for GCS’s residential division, up from $21.2 million in FY2013.
“There was an upturn in the residential sector on the back of improved new home sales, building approvals and record low interest rates which are reflected in the improved financial performance in this segment,” GCS said.
“Management is continually monitoring this business to rationalise and align resources to service this market.”
