The first building block for that strategy came in the form of the recent purchase of RD Hooper Engineering for $A2.4 million. RD Hooper provides general engineering and fabrication services, with a significant contribution from labour hire activities, to the coal and metalliferous mining industries.

Walter Mining parent company Walter Diversified Services (WDS) expects RD Hooper to contribute $A6 million revenue in 2008.

The purchase was financed from internal resources, and while WDS does not expect to gain any cost synergies from the acquisition, it sees benefits in the ability to balance the workload between its various engineering workshops and to gain new customers.

WDS already has regional engineering service centres in Mackay with IT Engineering and Wollongong with FAL Constructions.

WDS said it was on track to reach its prospectus forecasts of 2007 revenue of $214.2 million and net profit after tax of $12.4 million.

“Walter Mining has not performed to our original expectations, but this has been offset by Diversified Construction Corporation’s strong growth of around 200 percent, which has exceeded our targets,” WDS managing director Garry Ash said.

Like other contractors and mining companies, WDS has had to contend with labour and machinery shortages. While the company has enjoyed good employee retention, it has used the 457 visa scheme to bring in skilled personnel for both underground mining and the pipeline business.

The softening in work volumes at Walter Mining has meant there has been a certain amount of spare capacity in the business, buffering it from plant supply issues.

WDS said it will continue to look for acquisition opportunities, with $25 million capacity in its debt facilities.

Walter Diversified Services shares closed at $2.65 yesterday.