Opus International sinks into the red, writing down value of Australian, Canadian units

Tuesday 16th August 2016

Opus International Consultants, the listed engineering firm, sank into the red in the first half after writing down the value of its Australian and Canadian businesses which have struggled on falling oil and gas prices.

The Wellington-based company posted a net loss of $23.1 million, or 16 cents per share, in the six months ended June 30, from a profit of $15.9 million, or 11 cents, a year earlier, it said in a statement. That included a $22.6 million impairment charge on goodwill and a $1.4 million charge on the value of its Athabaskan Resource Co joint venture.

Given the difficult business environments with the decline in oil and gas prices and resource prices generally, we reassessed the value of our operations and impaired the carrying value of Australian assets by A$4.2 million and Canadian assets by C$17.8 million," chairman Kerry McDonald said. "Our New Zealand and UK businesses continue to show resilience despite subdued global trading conditions and have underpinned the group performance."

In April, Opus said it would restructure its businesses along sector lines rather than country-based divisions to try to draw on staff expertise across borders. The moves were prompted by the weak market conditions in Australia and Canada, which both posted operating losses in the latest period.

Opus said underlying operating earnings before interest and tax dropped 79 percent to $2.5 million on a 7.4 percent decline in trading revenue to $236.8 million.

The New Zealand division posted a 4 percent decline in revenue to $139.1 million and a 22 percent fall in operating earnings before interest and taxation to $14.9 million due to slimmer road contract margins after the New Zealand Transport Agency retendered contracts. The UK business posted a 12 percent fall in ebit to $1.3 million on a 4.9 percent gain in revenue to $35.3 million.

Opus's board announced an interim dividend of 2 cents per share payable on Sept. 30. Last year the company paid an interim dividend of 4.1 cents per share plus a special dividend of 2 cents.

The shares rose 2.6 percent to $1.19, having declined 6.6 percent so far this year.

(BusinessDesk)

BusinessDesk.co.nz

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