Yesterday the professional service consultancy announced a net profit after tax of $A13.8 million for 2010 while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 19% to $45.5 million.
Coffey downgraded its profit forecast in April, announcing likely EBITDA in the range of $45-50 million for the financial year.
Fee revenue slipped $34.7 million, or 7%, from the prior year to $475.7 million while total revenue was down 5% on the prior year to $769.8 million.
The directors have declared a fully franked final dividend of 3.5c per share, bringing the total annual fully franked dividend to 11c per share, compared to 13c the year before.
During the year, the company sold the MPL analytical laboratory business, which was assessed as a non-core asset, for $3.3 million.
Coffey managing director Roger Olds said while some parts of its business had outstanding results for the year, the mining and commercial property sectors remained challenging.
“The first half started strongly, and appeared to have recovered from the effects of the global financial crisis which had caused revenue decline during the third quarter of the 2009 financial year,” Olds said.
Olds said the second half of the year was disappointing with a number of contracts cancelled or postponed.
“When we did not see the expected lift in fee revenues early in the second half, we implemented further actions to improve fee revenue and operating performance,” he said.
“Firstly to enhance our ability to bid and win more and larger projects across multiple service lines, we increased the investment in our business development capability.
“Secondly, we initiated a comprehensive procurement review to assist in reducing major overhead costs.”
He said that while Coffey witnessed improved monthly fee revenue from March to June, it was not enough to give the company confidence its business sectors would be sustained.
“By June we reached a view that the economic and political environment was going to continue to create an uncertain market, so we implemented a plan to right-size the business,” he said.
“This resulted in some job losses, predominantly across the Asia-Pacific region, incurring a one-off cost of $3.9 million in June 2010, but importantly this will lead to cost savings of around $12-15 million in the 2011 financial year.”
Looking ahead, Olds believes there is still uncertainty in the markets.
“We remain cautious as to the timing and extent of the recovery worldwide,” he said.
“Unexpected economic and political events and reduced access to lending continues to affect the level of private sector investment, while generally governments worldwide are spending with less vigour than before the GFC in physical and social infrastructure. Investment is frequently being deferred until future returns seem more certain.”