Sharechat Logo

MetService expects FY earnings to drop on delay in inking new MoT contract

Thursday 26th March 2015

Text too small?

Meteorological Service of New Zealand, the state owned weather bureau, says annual earnings will be $2 million less than estimated because of delays finalising its largest contract.

Wellington based MetService lowered its forecast for earnings before interest and tax to $3.05 million in the 12 months ending June 30, from the $5.05 million originally forecast. The bureau is finalising funding for a new four year contract negotiated with the Ministry of Transport, Chair Sarah Smith said in MetService's first half report. The company earned Ebit of $5.096 million last year.

MetService, which became a state owned enterprise in 1992, wants to reduce its reliance on the MoT contract to provide public weather forecasts and warnings, by winning more sales outside of New Zealand. Last year it bought a stake in MetOcean Solutions, a New Zealand based oceanographic business, to further its international commercial subsidiary MetraWeather. The MoT contract currently accounts for 42 percent of revenue, down from 63 percent in 1993.

"Growth in New Zealand revenues and profitability are constrained by a small domestic market and the high proportion of revenue coming from a single contract with the Ministry of Transport, both of which represent challenges to the company's operating margins," MetService said in its Statement of Corporate Intent for the 2015-17 financial years. "MetService is therefore accelerating its growth initiatives in key international markets to drive greater returns."

The weather bureau expects export revenue to rise to $17.4 million by its 2017 financial year, representing 29.8 percent of total revenue, from $7.6 million in the 2014 year when it accounted for just 16.7 percent of revenue.

A three year investment of $9.3 million in the company's growth strategy means earnings growth will be modest over the period, MetService said.

In the first half of the current year, covering the six months through December 2014, profit dropped by almost two thirds to $443,000 from $1.25 million in the year earlier period. Revenue was little changed at $22.3 million, although non MoT contract revenue increased 6.2 percent. Costs increased 5.6 percent to $21.2 million.

The MoT contract is expected to be in place at the start of the new financial year from July 1, MetService said. It declined to provide revenue details of the new contract, citing commercial confidentiality.

 

 

 

 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report