Opus annual profit drops 36% on Canadian unit write-down, fattens dividend

Tuesday 16th February 2016

Opus International Consultants, the listed engineering firm, posted a 36 percent drop in annual profit as it wrote down the value of its Canadian business, while fattening its dividend to shareholders as underlying earnings beat expectations.

Net profit fell to $16.7 million, or 11 cents per share, in calendar 2015, from $26.2 million, or 17 cents, a year earlier, the Wellington-based company said in a statement. That included a $12.6 million impairment charge on the value of Opus's Canadian business and an $8.1 million gain after the Stewart Weir business missed targets that would trigger payments to the previous owner. Operating earnings before interest and tax fell 5.2 percent to $30.9 million, while revenue was down 6.5 percent to $506.2 million.

"It is a challenging environment, not one for the faint-hearted, but our market diversification and continuous improvement programmes are mitigating the downturn in some markets and helping the business thrive in others," chairman Kerry McDonald said. "Challenges remain, but we are well-placed on a new corporate strategy designed to reposition the business for the future, including targeting planned increases in infrastructure spending in each of our main markets."

The company had previously said its Australian and Canadian segments were struggling in their respective markets, and had embarked on a new strategy for the business through to 2020.

The board declared a final dividend of 4.9 cents per share, taking the annual payout to 11 cents, including a 2 cents special dividend declared at the interim result.

Opus said the increased dividend was due to a stronger cash position. The company changed its dividend policy to between 50 percent and 70 percent of adjusted net profit. The ordinary dividends of 9 cents per share amount to about 63 percent of adjusted net profit, and including the special dividend, rises to 77 percent.

The dividend payment and underlying earnings measures beat Forsyth Barr analyst James Bascand's forecast for ebit of $27 million and dividends per share of 8.2 cents, and Opus shares rose 2.6 percent to $1.20.

Opus's New Zealand division increased operating ebit 29 percent to $36.8 million, even as revenue slipped 3.7 percent to $276.7 million, while the UK division more than doubled earnings to $2.7 million on a 30 percent gain in sales to $64.3 million.

The Australian unit widened an ebit-loss to $2.6 million on a 22 percent drop in revenue to $50.5 million, while the Canadian business reported an 80 percent slump in earnings to $1.5 million on an 18 percent decline in sales to $112.4 million.

The engineering consultancy cut staff numbers in all segments bar the growing UK unit, which added employees, and has restructured its Canadian and Australian businesses.

BusinessDesk.co.nz

Comments from our readers

No comments yet