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Fulton Hogan FY profit bounces back on record sales, lack of charges

Wednesday 2nd October 2013

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Fulton Hogan, the privately-held construction firm that gets 60 percent of revenue in Australia, reported a bounce back in full-year profit on record sales and a lack of year-earlier charges for a then-troubled highway project.

Profit was $96.5 million in the year ended June 30, from $7.9 million a year earlier, the Dunedin-based company said in a statement. Sales rose about 19 percent to an all-time high of $3.22 billion.

Managing director Nick Miller said the company's Australian businesses led sales growth, including work on the Australia Pacific LNG project in Queensland. Profit in the previous year was eroded by charges against its Pacific Highway joint venture in New South Wales, which Miller said today is "on budget and timetable for 2014."

"The financial performance was pleasing in what we see as a pretty subdued sector in Australia and New Zealand'" he said. "A lot of effort has gone into resolving operational and contracting challenges associated with several major Australian projects which have been hampered by some of the most severe weather in decades."

Fulton Hogan may not build much on last year's record sales in the 2014 year.

"We don't see significant revenue growth in the financial year," Miller said, adding that turnover is on target for the first quarter.

The company paid a first-half dividend of 7 cents. A proposed final dividend of 17 cents, which has yet to be endorsed by the board, would lift the annual payment to 24 cents.

The rebound in profit meant the company could push on with its buyback of shares held by Shell Group after it deferred two payments in 2012. It spent $55.7 million buying shares in the latest year, reducing Shell's holding to about 10 percent from 37.4 percent in late 2010 when the buyback started.

Fulton Hogan has two tranches left to buy - $76 million in June 2014 and $46 million in December next year. It also repaid $70 million of bank debt in the latest year.

The company made only a two-page media release of its results today and hasn't yet filed its annual report with the Companies Office.

Its forward order book currently sits at $3.4 billion, down from the $3.7 billion figure it gave last November. Projects in the pipeline include Transmission Gully north of Wellington, the Princes Highway upgrade, Berry Bypass in New South Wales and a southeast Queensland road maintenance contract.

"There's still a strong pipeline in Australia," Miller said.

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