Cavotec buoyed by sales opportunities in Asia and Middle East

Cavotec MSL Holdings is targeting a return to its 2008 pre-economic crisis trading in fiscal 2010, as it eyes further sales opportunities for its engineering products particularly into Asia and the Middle East.

The NZX-listed engineering group's outlook helped its share price climb 19c or 7.7 per cent to $2.65c yesterday.

Cavotec reported a NZ$11.39 million net profit for the 2009 fiscal year, down 43.8 per cent on 2008, saying last year its customers were impacted by one of the most difficult and challenging years for the world economy.

The group said its annual revenues from sales of goods decreased 11.6 per cent in the 12 months to December 31, 2009 to 125.3m (NZ$277m), compared to 2008. Cavotec, with 677 staff including a MoorMaster ship mooring-based division in Christchurch, reported earnings before interest and tax decreased by 32.8 per cent to 8.95m.

Chief executive Ottonel Popesco said to offset these downtrends Cavotec undertook several group-wide measures, including a reduction of 10 per cent in management salaries. The company would re-evaluate whether it could lift the freeze on management entitlements at the end of the March quarter.

It would pay a 3c a share dividend for 2009, with no dividend paid in 2008.

The company would in 2010 target a return to 2008's ebit of 13.3m and revenues of 141.7m.

While it was not in discussions regarding any acquisitions, Cavotec would watch for well-run family-style firms it could buy to increase its product range in the ports, airports, mining and engineering sectors.

"It is obvious that if we would like to grow in the future we need to introduce integration of our systems and more products," Popesco said.

Forsyth Barr analyst Jeremy Simpson said the company's targeting of a return to 2008 operating levels was a positive sign, helped by a boost in product orders in the fourth quarter to December 31, 2009.

Cavotec's order intake for 2009 totalled 144.0m, including a year-end Bahrain airport order of 30m, with the total close to 2008, Popesco said.

Ports & Maritime, traditionally Cavotec's largest market, was severely affected by the decrease in container traffic after the economic downturn.

Almost all major ports reduced their traffic by more than 20 per cent, subsequently reducing the need for new port equipment.

The company was following through client project requests regarding its aircraft fuel and air servicing systems at airports including a "major, major" one in the Far East Asia, Popesco said.

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