Fulton Hogan leaves troubles behind
Leading civil engineering and resources company Fulton Hogan has put last year's troubles in Australia behind it, posting a turnaround profit of $96.5 million.
The result compares with a $7.9m profit in the previous year to June 30 2012.
The return to strong profitability for the Christchurch headquartered company with more than 5300 staff in New Zealand and Australia coincides with its 80th anniversary.
Its 2200 shareholders which are the Fulton and Hogan families, past staff and about a quarter of the present 5300 staff, will receive a total dividend of 24 cents a share subject to board approval, up from last year's 11.5c.
Company revenues rose 18 per cent, or about $520m, to $3.22 billion, from last year's $2.7b.
The company enjoyed growth in the New Zealand and Australian construction divisions, strong section sales of 520 in Christchurch and Auckland, the ramping up of the infrastructure repair work in Christchurch and plenty of airport surfacing work in Australia and New Zealand.
Fulton Hogan's bread and butter is work in construction, roading, quarrying, asphalt production and precast manufacturing.
It is one of the five construction companies in the Stronger Christchurch Infrastructure Rebuild Team, SCIRT, rebuilding the city's sewer, water, stormwater and road networks.
Managing director Nick Miller said SCIRT's work had ramped up to its target of $40m to $50m a month with Fulton Hogan sharing a fifth of that.
The strong performance in the year to June 2013 had enabled Fulton Hogan to repay about $70m in debt and afford a $55.7m buyback of shares from Shell.
Fulton Hogan has about $112 million more to pay Shell to buy back the last 10.4 per cent - $76m next June and $46m in December next year.
Miller said the company had tackled several issues in Australia this year with a more prudent approach to managing risk in the construction business and improving systems while better weather had noticeably helped.
Its "industries business" also improved significantly and it saw the benefits of the full integration of the Pioneer Road Services business into Fulton Hogan.
Also, its project mix in Australia was more balanced this year.
It had a good portfolio of cost-reimbursable design and construct projects and only design and construct whereas last year it had a weighting to design and construct which tended to carry more risk.
The forward order book was strong at $3.4b.
However, it was not expecting a significant increase in revenues in the financial year to June 2014.
"We see a flatter year in terms of our forecast outlook revenue wise," Miller said.
That was because the resources sector was slowing in Australia and while less than 10 per cent of its revenues were directly exposed to that sector the company did expect a flow on effect.
A change in government in Australia was expected to deliver a rethink of infrastructure projects and their priorities.
However, the change by state governments to outsource roading maintenance offered opportunities for which they were already bidding.
- © Fairfax NZ News