AMEC on track for ongoing growth

ENGINEERING consultancy AMEC has nearly doubled its revenue for the six months to June 30 spurred on by major Australian mining contracts and says the outlook for the coming year is even brighter.
AMEC on track for ongoing growth AMEC on track for ongoing growth AMEC on track for ongoing growth AMEC on track for ongoing growth AMEC on track for ongoing growth

Surface miner at FMG's Cloudbreak mine in the Pilbara.

Brooke Showers

AMEC’s earnings before interest, tax and amortisation were up 25% for the first half of 2012 to $A237 million compared to an EBITA in the second half of 2011 of $189 million.

Revenue for the six months climbed 37% to $3.2 million, ahead of $2.3 million reported in revenue for the second half of 2011.

Net profit also grew by 25% from $A157 million in the previous period to $197 million.

Part of the success of AMEC’s revenue grabbing half year was due to contract wins in Australia, including two asset support contracts for the AMEC Clough joint venture and work for Fortescue Metals Group’s Cloudbreak project in the Pilbara.

AMEC chief executive Samir Brikho said revenue growth was boosted by phasing into project execution and procurement in the oil and gas and mining sectors, which had been particularly strong sectors for the business.

AMEC’s operating cash flow increased by 90% to $222 million versus the $116 million in the six months to December 2011.

The massive increase was assigned to increased procurement activities in the natural resource sector.

“We've been asked by certain customers to undertake additional procurement activity in natural resources, in conjunction with high-quality engineering services,” AMEC chief financial officer Ian McHoul said.

“Now the scale of that procurement is very much increased this half, an increase of about 200 million pounds ($A295.6 million), the margin we earn from that is next to nothing.

“However, if you exclude that incremental procurement, which carries no margin, then the margins come out at around 8.2 per cent which is stable year-on-year.”

AMEC’s revenue guidance remained unchanged with growth year-on-year expected to be lower due to the phasing of project execution.

McHoull said the company expected underlying revenue growth to be generally maintained at the same level as the first half, staying on track to deliver double-digit underlying revenue growth for the full-year.

This article first appeared in ILN's sister publication