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Owens steps into the unknown

Friday 6th June 2003

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Last week was a big week for Owens Group, what with selling Hirepool, setting up a defence against a takeover by Australia's Toll Holdings, putting out a profit announcement, and then replacing it with a loss announcement.

Not too much should be read into the latter two items, which simply involved a difference of opinion with its auditors over the correct treatment of a tax asset.

Taking that one-off writedown out of account, Owens didn't do too badly in the second half of the year.

At the half-year its profit before unusuals and tax was just $1 million, down from $4.4 million the year before.

But it seems to have made up lost ground, reporting a $4.6 million full year result pre-unusuals, although that was still down from $8million.

The $45 million proceeds from the sale of Hirepool will allow it to pay off all its term debt, which stood at $23 million a year ago, and put some cash in the bank. But Hirepool was its most profitable subsidiary by miles.

With a market capitalisation of $48.5 million it's hardly in a position to get into the driving seat of industry consolidation and may have to fight the giant Toll, with or without Tranz Rail, for market share. Investors have been voting with their feet.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

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