Opus International misses 1H profit expectations as NZ business struggles on Mainzeal, local govt spend

Tuesday 13th August 2013

Opus International Consultants, the engineering firm with one of four mandates to lead design the Christchurch rebuild, posted a 13 percent decline in first-half earnings, missing estimates, as its local business was hurt by the Mainzeal liquidation and lower local authority spending.

Net profit fell to $9.4 million, or 6 cents per share, in the six months ended June 30, from $10.8 million, or 7 cents, a year earlier, the Wellington-based company said in a statement. That was below First NZ Capital's forecast for profit of $10.2 million, in what the research house saw as a tough period for the company. The New Zealand segment was Opus International's only region to report a fall in revenue and earnings. Total revenue rose 4 percent to $211.7 million.

"In New Zealand we have been impacted by the Mainzeal liquidation and reduced local government spending, however the Christchurch earthquake rebuild continues to gain momentum," chief executive David Prentice said. "We see sizeable infrastructure opportunities for the business including the Auckland transport network, and the energy, rural and dairy sectors."

The board declared a fully-imputed interim dividend of 4 cents per share, in line with the First NZ forecast, or some $6 million. The company said that's slightly higher than usual reflecting expectations of a better second half.

The shares were unchanged at $1.70 yesterday, and have shed 15 percent this year.

Opus International's New Zealand unit reported a 2.6 percent fall in sales to $141 million and a 20 percent drop in earnings before interest and tax to $12.4 million. The UK unit boosted sales 78 percent to $18.9 million and turned profitable on an EBIT basis with positive earnings of $261,000.

The Australian business boosted revenue 7.8 percent to $40.3 million, returning to EBIT-profit with $347,000, and the Canadian business lifted sales 6.5 percent to $11.5 million and EBIT rose 51 percent to $780,000.

Prentice said the company is looking at growth opportunities in the Middle East, North Africa and Asia, as evidenced by its 10-year contract with the World Bank in Africa's Liberia.

The company said UEM Group announced on Aug. 5 plans to sell its entire stake in an intermediate holding company, Opus Group BHD, to Faber Group in exchange for shares and cash.

"Opus International Consultants Ltd understand that this disposal would result in UEM Group reducing its ownership of, but still maintaining a majority shareholding in, the group of intermediate holding companies that hold the stake in Opus International Consultants," it said.

Separately, the engineering firm appointed Azmir Merican as a new director, replacing Suhaimi Halim who resigned last month.

The Malaysian group owns about 60 percent of Opus International Consultants and is ultimately controlled by Khazanah Nasional Bhd.

BusinessDesk.co.nz

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