More gains in the pipeline for Opus

HAMISH MCNICOL
Last updated 11:00 11/02/2014

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Opus International Consultants expects a second-half turnaround in domestic activity will continue building momentum to back up increased profitability from its overseas businesses.

Yesterday, the listed infrastructure consultancy announced a $22.8 million net profit, down slightly as a result of increased interest and tax costs.

Profit after tax for the year ended December 31, 2013, was down 2.6 per cent from 2012, although operating revenue improved to $459.7m after the acquisition of engineering and environmental consultancy Stewart Weir in Canada.

But the Wellington-based company's New Zealand business earnings before interest and tax (Ebit) decreased 12 per cent, to $26.9m, although revenue rose by 1 per cent to $285.6m

Chief executive David Prentice said he was happy with the result, especially given the context of the challenging operating environment last year.

"I guess the key point is the operating profit has gone up by 14 per cent, which is great."

Opus' tax and interest bills rose 36 per cent and 32 per cent, but Prentice said the New Zealand business earnings had improved significantly on six months' ago.

Its second-half Ebit rose 16 per cent on the six months ended June 30, 2013, which had been behind where Prentice wanted it to be.

"We've seen a significant pickup, particularly in New Zealand over the second part of the year."

On top of improved business confidence and a general uptick in the economy, Prentice said Christchurch activity was starting to flow through.

Having secured contracts for the Avon River Precinct and the Justice and Emergency Services Precinct, Opus now had 225 staff involved with rebuild projects.

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

He said Opus's North America business performed well, and was strongly influenced by the acquisition of Stewart Weir, which exceeded expectations by adding $35.8m to Opus' revenue in the four months to December. But the oil and gas opportunities in Canada were more exciting looking forward, with the oil-sand investment in Alberta topping C$21 billion (NZ$23b) in 2011.

About 40 per cent of Stewart Weir's business specialises in pipeline infrastructure and energy-related projects.

Opus's UK-based business recorded a 60 per cent increase in revenue, to $39.2m, but in Australia revenue dropped by 3 per cent to $75.9m, as the economy "tightened considerably".

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Shares in Opus closed yesterday at $2.08, 7 cents down.

- BusinessDay

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