Efficiency pays off for Runge

MINING technology services company Runge is enjoying the benefits of greater efficiency across its global operations and increased demand due to the pick-up in resources activity with its revenue rising by 20% year-on-year to $A45.2 million for the six months ended December 2010.
Efficiency pays off for Runge Efficiency pays off for Runge Efficiency pays off for Runge Efficiency pays off for Runge Efficiency pays off for Runge

Runge managing director Tony Kinnane.

Lou Caruana

The low point in the cycle is over, with the company reporting an interim earnings before interest, tax, and amortisation of $3.7 million, which is 32% higher year-on year, managing director Tony Kinnane said.

“Demand for Runge’s services is increasing and management’s focus on customer engagement and efficiency across our global consulting footprint is starting to be reflected in the improved financial results. These results are testament to the hard work, effort and focus of Runge’s people around the globe,” he said.

“We have been able to re-establish revenues to pre-[global financial crisis] levels, with growth returning to the Australian and American regions.”

Kinnane warned that the strengthening Australian dollar against the US dollar had an adverse impact on reported results with a foreign exchange loss of $1.2 million recorded in the half year.

Professional fees were up 25% to $33.6 million due to improved utilisation of consulting professionals. Almost half of the professional fees generated during the first half of the 2011 financial year were from work undertaken outside of Australia.

Software revenue was up 6% to $8.7 million with 44% of new licence fees during H1 generated outside of Australia.

Labs and testing operations continued to expand with revenue up 19% to $2.5 million. The recent Queensland flooding is expected to temporarily interrupt this business during the March quarter, before rebounding in the June quarter.

The new Wollongong laboratory facilities are now operational, providing increased capacity and, with the strong demand elsewhere in Australia and overseas, the company is confident of further growth in this business.

Commenting on the outlook for Runge, Kinnane said with the operational performance of the business having improved significantly over the last 12 months, the earnings outlook remained positive and should continue to improve.

“With commodity demand continuing to strengthen we are seeing increased opportunities and levels of activity across our global businesses. Additionally, we have refocused the group on its core global capabilities and this has better positioned us to build momentum and continue growing earnings.

Given the demand for consulting services continues to grow in all of Runge’s operating regions, Kinnane said the company had further opportunities to continue increasing consultant utilisation levels.

“We have put in place a number of strategies to address the restrictions posed by the tight labour market, including actively expanding our Asian presence, where we are seeing a number of attractive growth opportunities leveraging the growing minerals industry in that region.

“The pipeline for software sales in the second half of this year remains strong, however it is difficult to forecast revenue given that sales are dependent on the timing of orders and delivery.”