'Confident' Opus looks to Pacific, Middle East

HAMISH MCNICOL
Last updated 05:00 19/08/2014

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Mixed market conditions in Australasia and an "unusually harsh winter" in Canada impacted on listed infrastructure consultancy Opus's first-half profit, which was up slightly to $9.9 million.

But chief executive David Prentice is "quietly confident", as Opus looks to new opportunities in the Middle East and Pacific Islands.

The company announced yesterday its net profit for the six months to June 30, 2014, had risen 6 per cent.

Revenue was up 25 per cent to $265.4m, as Opus's Canadian acquisition, Stewart Weir, increased its revenue four-fold.

Chairman Kerry McDonald said top line growth in New Zealand, Britain and Canada was pleasing.

"However, New Zealand and Australia were not immune to challenging market conditions and incurred a number of one-off costs," McDonald said.

In Canada, revenue increased to $57.4m, mostly due to the acquisition of Stewart Weir.

The Canadian investment last year was Opus's biggest overseas expansion since 2007, worth an initial C$50m (NZ$54.7m), although possibly climbing another $43.8m in integration and performance payments.

But Prentice said profitability was affected by an "unusually harsh winter", as earnings before interest and tax (ebit) rose to $3m only.

"Yes, the first-half result has been impacted as a result, but in the last couple of months there's been a significant turnaround.

"We're very, very happy with that acquisition. It's integrating very well."

In Britain revenue grew 41 per cent, reflecting an improved economy.

In New Zealand, Opus said market conditions remained variable, though revenue rose $6.9m to $147.9m during the period.

Prentice said he expected New Zealand business would remain patchy.

Opus's Australian arm struggled, reflecting a general slowdown in the infrastructure and resource sectors.

"Growth from Opus Rail and Western Australia, as well as flood-recovery work in Queensland has been offset by continued weakness in the New South Wales commercial and building sectors," Prentice said.

Opus would look to maintain its core business while keeping costs down in Australia.

Prentice said he was "quietly confident", looking ahead, as Opus diversified its portfolio.

"We've now established bases in both Dubai and Abu Dhabi and are actually bidding for contracts there, which is very exciting.

"And interestingly enough, just over the past six months to a year, we've been exploring opportunities in Fiji and Samoa and now have some contracts there."

The company announced an interim dividend of 4 cents a share.

Opus shares fell 12 cents yesterday, to close at $1.70.

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- The Dominion Post

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