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Opus International sinks into the red as ailing oil industry triggers more write-downs in Canada

Thursday 2nd February 2017

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 Opus International Consultants sank into the red as a struggling oil and gas sector weighed on the engineering firm's Canadian business, triggering more impairment charges. 

The Wellington-based company reported a loss of $29.9 million, or 20 cents per share, in calendar 2016, compared to a profit of $16.7 million, or 11 cents, a year earlier, it said in a statement. The engineering firm wrote down the value of its Canadian Stewart Weir assets by $33.2 million and its Australian division by $4.4 million in the year, two segments it has previously cited as struggling. 

Revenue fell 6.8 percent to $470.9 million, led by a 30 percent slump in sales from its Canadian division, which chairman Kerry McDonald said was "hard hit by low oil prices and the resulting collapse in oil industry work." 

That downturn, which also weighed on the Australian business, prompted Opus to restructure its businesses last year along sector lines rather than country-based divisions to try to draw on staff expertise across borders. Staff wages fell 3 percent to $278.3 million, with Canadian employee remuneration down by a fifth to $50.2 million. 

Our new global strategy focuses on enhancing capability in proven areas of expertise, and better collaboration across the key global growth sectors of transportation, buildings and water," chief executive David Prentice said. "We are increasing the effectiveness of our excellent talent and providing clients with integrated engineering and wider solutions, regardless of where they are located." 

The board declared a final dividend of 2 cents per share, payable on April 3 to shareholders on the register on March 17. That takes the annual payment to 4 cents, down from 11 cents a year earlier which included a special dividend to account for Opus's strong cash position. 

The shares fell 2.1 percent to 93 cents. 

The engineering firm's operating cash flow shrank 22 percent to $14.4 million in the year and net loan repayments of $44.2 million left it with cash and equivalents of $30.1 million as at Dec. 31, from $59.8 million a year earlier. Opus had long-term borrowings of $54.4 million at the balance date, down from $89.4 million a year earlier. 

The company's New Zealand operation maintained earnings before interest and tax at about $36.9 million on a 1.2 percent increase in sales to $279.8 million. Local wages increased 2.9 percent to $140.8 million.

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