Emeco optimistic after 27% profit jump

EARTHMOVING equipment provider Emeco Holdings will place more importance on establishing a presence in Chile as a way to leverage growth in the current financial year after reporting a $A71.1 million net profit after tax for FY2012.
Emeco optimistic after 27% profit jump Emeco optimistic after 27% profit jump Emeco optimistic after 27% profit jump Emeco optimistic after 27% profit jump Emeco optimistic after 27% profit jump

 

Lauren Barrett

The figure represented a 27% jump on the $56 million profit achieved in the previous corresponding year.

Statutory net profit for FY12 was $69.7 million and the company achieved revenue to the amount of $565.2 million, up 12.5% from the prior year on increasing demand for maintained equipment.

The healthy earnings for FY12 underpinned the company’s third consecutive year of growth, according to Emeco managing director Keith Gordon.

“We have continued to execute the strategy we detailed to the market in 2010,” he said.

“A critical element to our strategy is to establish further market diversification and we have therefore committed $140 million in growth investment for financial year 2013 to establish a quality mining fleet in Chile and to meet demand from customers in Indonesia.”

In a closer look at the company’s operating business, Emeco Canada continued to progress despite a subdued first quarter, with revenue for the year up 3.5% to $67.2 million.

Emeco Indonesia’s revenue jumped 12% to $49.9 million while revenue from its rental and maintenance division in Australia tipped in at $383.3 million, representing a 17.1% increase.

Emeco only established a presence in Chile in February this year and allocated $50 million to kick off progress.

Emeco said extensive business activity had been undertaken in the country with relationships formed with prospective customers.

Reflecting a robust balance sheet, Emeco declared 6c per share in fully franked dividends and today said it would implement a share buy-back program to purchase up to 5% of its issued shares over the next year.

The company’s operating cash flow was up 7.2% to $230.5 million in FY12.

Looking ahead, Emeco expects mining volumes from its markets to grow over the next couple of years

“Our major focus for growth in financial year 2013 will be in Chile where activity in the copper sector is expanding and demand from prospective customers is strong,” Gordon said.

“In Canada we will concentrate on improving returns from the existing fleet and we will continue to evaluate investment in the Indonesian business targeted at servicing high quality customers.”

While upside remained through the company’s new ventures, Emeco advised that a number of contracts with coal customers would end in the middle of FY13 and it warned that some customers would be seeking to preserve their capital spend on earthmoving equipment.

Despite this, the company’s overall outlook was positive.

“Emeco is in far better shape to perform across the mining cycle than it was three years ago,” Gordon said.

“We are continuing to see strong enquiry from the gold sector where we have recently negotiated expanded fleets with a number of our customers in Western Australia and from iron ore where we will be mobilising equipment to our first major project site in South Australia over the next month.”

This article first appeared in ILN's sister publication MiningNews.net.

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