Opus International Consultants (Opus) reported a mixed performance for the first six months of 2016 with continuing difficult economic conditions, particularly in Canada and Australia, and weaker margins in New Zealand. In the Half Year ending 30 June, revenue was $236.8m, down 7.4%, and underlying operating earnings before interest and tax (EBIT) were $2.5m, down 78.7%.
“As signalled earlier this year, we continue to encounter difficult market conditions in Australia and Canada, with losses reported for both operations. We responded accordingly, to reduce costs and balance short term profitability with long term sustainability. Australia reported $24.8m revenue and an operating EBIT loss of $1.7m. Canada reported $37.2m revenue and an operating EBIT loss of $6.5m, said Opus Chairman Kerry McDonald.
“Given the difficult business environments with the decline in oil and gas prices and resource prices generally we reassessed the value of our operations and impaired the carrying value of Australian assets by AU$4.2m and Canadian assets by CA$17.8m,” said Mr McDonald.
“Our New Zealand and UK businesses continue to show resilience despite subdued global trading conditions and have underpinned the Group performance. New Zealand had a solid start to the year where better diversified earnings partly offset the negative impacts of reduced roading contract margins from the retendered New Zealand Transport Agency’s Network Outcome Contracts. The business delivered $139.1m in revenue (a 4% decrease), and $14.9m in operating EBIT (a 22% decrease),” said Dr David Prentice, Chief Executive.
“Our UK business was named Company of the Year by New Civil Engineer (NCE) at the NCE100 awards and continued to perform strongly, against a backdrop of economic uncertainty created by BREXIT. The business generated $35.3m revenue (an increase of 4.9% on 2015) and $1.3m in operating EBIT (a decrease of 12.3%).
Dr Prentice said that business improvement activities continue as a high priority, focusing on costs, efficiency, marketing and transitioning to the new strategy.
“Our new global growth strategy is now focusing on enhanced capability in proven areas of expertise and driving better collaboration across key global growth sectors,”
“It has been developed to drive sustainable and profitable growth and is focused on the transportation, buildings, and water market sectors where growth opportunities are well aligned to our strong capabilities.
“Our new strategy emphasises ‘joined-up’ solutions linking state-of-the-art engineering, a people-centric focus and data. Our leadership model has been realigned to target significant opportunities and facilitate the movement of resources where needed,” added Dr Prentice.
Despite the challenges, Opus’ cash position is strong with operating cash ahead of last year which supported a fully imputed dividend of 2 cents at the half-year.