Managing director Mark Read said Sedgman was well positioned to benefit from the recovery, which is expected to lead to increased demand for steel and therefore steel-making raw materials.
The company is processing more than 19 million tonnes per annum of coal and 10Mtpa of ore under operations contracts which provide longer term, recurring income and diversification of business risk.
“Australia’s thermal coal exports are also forecast to increase, mainly to Asian markets, underpinned by higher production and new export infrastructure capacity,” Read said.
“We expect to continue to grow our order book and capitalise on the increasing number of project opportunities both in Australia and overseas.”
Bottom line net profit for the half of $10.2 million compared to a loss of $7.1 million in the previous corresponding period which included a $20 million goodwill write-down.
The company’s interim earnings before interest, tax and amortisation (EBITA) fell 26.7% to $15.4 million.
The profit was achieved on combined revenue of $A145.8 million – down 18.1% from $A178.1 million previously, due mainly to the run-off of the Lake Vermont, Daunia, Moatize and Sonoma projects, and cessation of operations support contracts at Lake Lindsay and Dawson.
Read described the result as a solid and credible performance which had demonstrated the resilience of Sedgman’s business model in tough economic conditions.
“Sedgman generated strong operating cash flows during the half year and has continued to secure new contracts based on its reputation for being the world leader in coal processing and materials-handling technologies,” he said.
During the half year, Sedgman completed the $80 million Daunia design and procurement project on time and on budget.
The company also secured the $75 million ATCOM upgrade contract in South Africa and $13 million long lead item contract for the Benga coal project in Mozambique.
Read said Sedgman’s positive long-term outlook was underpinned by an increasing pipeline of potential revenue from targeted projects which had grown by $740 million to $5.5 billion, including $1.2 billion from 27 projects expected to proceed within a year.
“Importantly we continued to replenish our order book which was up $30 million to $560 million at the end of the half and identified a further $177 million worth of contracts with a high probability of being added to the order book before the end of the financial year,” he said.
“Sedgman is also now working on a record number of coal studies and increased personnel headcount accordingly by 7 per cent to almost 700 during the period.”
Read said the integration and rebranding of Intermet and Pac-Rim under the Sedgman banner was completed during the half year and an upturn in demand for engineering services from the metalliferous sector was also expected as the global economic recovery continued.
