Cavotec projects rekindled

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Global infrastructure engineering group Cavotec says despite a slump in its order intake in the second quarter, activity has picked up in the past five weeks as client projects are rekindled.

Cavotec recently jumped up the South Island leader board in terms of capitalisation of $183 million to sixth place behind number five, Lyttelton Port of Christchurch and leapfrogging Pyne Gould Corp now capitalised at $135 million.

NZX-listed Cavotec, which manufactures port mooring, airport fuel and mining power systems, had seen customers previously hesitant about placing larger orders come back to the firm.

Larger projects formerly on hold had begun to formalise into concrete orders.

"Though this quarter's activity was the lowest for Cavotec in quite some time, we still remain a step ahead of our industry's economic trends and see the second half of 2009 gaining momentum," chief financial officer John Polatz said.

The June 30 quarterly intake was [Euro]26.2 million, (NZ$55m) down 29.2 per cent from the 2008 second quarter intake of [Euro]36.9 million and down about 25.2 per cent from the intake of [Euro]25.2 million in the first quarter.

"Because of the large number of capital investments our customers have been hesitant to pull the trigger, and engage on multi-million or high hundreds of thousand of euro-type projects . . . but since June 30 we've booked one very good multi-million euro order we can't talk about because it's Government related," Polatz said.

"We see a few other very large projects on the horizon actually past contract and moving towards order status in the next few months."

Cavotec - which operates around the world - believed that US and European Government subsidy and stimulatory packages would help its cause, freeing up capital for use in the usually privately held ports and airports sector, he added.

In April Cavotec announced staff and senior executives had voluntarily taken 5 per cent and 10 per cent "pre-emptive" pay cuts in a contingency plan to deal with the effects of the global financial crisis.

However, within the current environment he said the group was now thinking these savings could be paid back to top up the pay previously promised to staff.

"It was more of a conservative approach, a good chunk of the company is still owned by employees . . . we're not committed to paying it back, but we would like to think that by the end of the year or within 2010 we can at least give back some of the sacrifice of the salary cuts."

It continued to work on attracting orders for its port service systems, based around a vacuum-based ship mooring system developed by Christchurch's Peter Montgomery and still engineered in the Garden City.

The number of Christchurch staff had doubled to around 15 since Cavotec merged with Mooring Systems in January 2007.

The installation of the first four units for Nordic Ferry Services A/S in Denmark had been concluded with the units operational.

NFS has a further eight MoorMaster units on order for installation at other Danish ports.

- © Fairfax NZ News