26/08/2014 - 13:37

SCEE profit falls in competitive market

26/08/2014 - 13:37

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Southern Cross Electrical Engineering has reported a $9.6 million slump in full-year profit to $7.7 million on the back of a 21 per cent fall in revenue to $218.2 million.

SCEE managing director Simon High.

Southern Cross Electrical Engineering has reported a $9.6 million slump in full-year profit to $7.7 million on the back of a 21 per cent fall in revenue to $218.2 million.

SCEE started the financial year on a high with ongoing work at Rio Tinto’s Cape Lambert port B phase A and the Anglogold Ashanti Tropicana gold project, however both projects were completed during the first half of the year.

“The second half started slowly as a result of a time gap between the completion of these key projects and the commencement of new awards but increased in the final quarter as activity ramped up on new projects,” the company said in a statement.

SCEE managing director Simon High said tendering had become increasingly competitive with a reduction in the volume of available work.

“We are also seeing a notable increase in the time taken to bid, re-bid and then negotiate terms and conditions which in turn has resulted in delays in contracts being awarded,” he said.

In July SCEE won a $25 million contract with BHP Billiton Iron Ore for electrical and instrumentation works at its Yarnima power station near Newman, replacing the collapsed Forge Group who was originally contracted to build the $100 million 190 megawatt power station.

Also, in the last two weeks SCEE was awarded two contracts worth a total of $80 million with CITIC Pacific Mining for its Sino Iron project at Cape Preston, which is expected to begin in September.

 “While the volume of large scale construction work has undoubtedly decreased from the peaks of recent years, we expect that this will be replaced in part by an increase in operations and maintenance works as capital projects are completed and become operational, particularly in the iron ore and LNG sectors,” Mr High said.

“In the iron ore sector, securing work on the next phase of the CITIC Pacific Sino Iron project was a significant and, together with the completion of the Rio Tinto Cape Lambert port, provides a solid base of construction work for FY15.

“In the LNG sector it was disappointing not to have secured a greater share of the first wave of construction awards on the six Australian onshore LNG plants, however, with the significant volume of E&I works still to be performed across the projects and limited capacity to perform it, we remain hopeful of securing further work as the projects progress,” he said.

The company declared a final dividend of 2.7 cents per share, fully franked, in line with its total payout last year.

Mr High said the company was continuing to explore acquisitions and opportunities as competition for work in the sector continues to tighten.

SCEE’s share price fell by 3.1 per cent to 61.5 cents per share at 1:30pm. 

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