Australia: Clough Reports Full Year Results

Engineering and project services company Clough Limited announced statutory NPAT from continuing operations of $50.7 million for the year ended 30 June 2012.

NPAT including discontinued activities increased by 29% to $42.9 million, reflecting a gain on the Marine Construction business sale, which was offset by a loss on legacy property holdings.

The Board has declared a final dividend of 2.6 cents per share (25% franked), up 18%. Earnings per share from continuing operations were 6.6 cents, up 2%.

Underlying EBIT from Clough operations (excluding Forge) was $37.2 million, up 4%. In addition, Forge contributed $24 million of profit before tax to Clough’s overall profit for the year.

Contractual issues which impacted the first half of the year have been largely resolved in line with expectations. An organisational restructure to drive a focus on excellence in project delivery and cost efficiency was completed during the year and will support earnings improvement in FY13.

The second half of FY12 saw a strong improvement across Clough’s operations and an increase in demand for Clough’s services, which is reflected in the H2 underlying EBIT from Clough operations (excluding Forge) of $24.4 million.

Operational Performance

As at 30 June 2012, Clough had an order book of $2.3 billion. Approximately $1.5 billion in new contracts were secured during the year with a number of second half awards including three new contracts for Chevron’s Wheatstone project and two new contracts on INPEX’s Ichthys project.

Lost time injury frequency rates per million work hours were at a ten year low, decreasing by 38% to 0.13. Total recordable injury frequency rates per million work hours decreased by 52% to a record low of 2.05.

The Gorgon EPCM project continued to progress well, with Clough’s employee numbers increasing to nearly 700, while Clough’s PNG workforce worked more than 15 million work hours without recording a lost time injury. The BAM Clough Joint Venture also commenced work on three new contracts for the Jetties and Near Shore Marine business.

Forge continued its strong performance with total revenue increasing to $780.6 million and profit before tax at $70.1 million. Clough’s shareholding in Forge increased to 35.85% during the year.

Strategy and Outlook

Improved performance from Clough operations (excluding Forge) is expected to continue across FY13, with potential for a stronger second half. Clough has approximately $1.1 billion in revenue already secured for FY13, with approximately $550 million already secured for H1. Clough anticipates a minimum EBIT margin (excluding Forge) of 5%.

Forge is expected to continue to make a significant contribution to Clough’s overall profit in FY13.

Clough’s CEO and Managing Director Kevin Gallagher said Clough had made strong progress in the second half to improve earnings.

“Our strategy is to deliver superior value by increasing earnings per share and providing an appropriate return to shareholders.”

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LNG World News Staff, August 23, 2012