Variety pays dividends for Walter

SPREADING its interests across two separate industries has paid off for specialist service provider Walter Diversified Services, with the Australian-listed company yesterday announcing an after-tax profit of $A13 million for the 2007 financial year.
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WDS contractors underground at Dendrobium.

Staff Reporter

The company's Diversified Construction Corporation division exceeded expected targets on the back of the booming market for oil, gas and water pipeline construction.

The company's Walter Mining division failed to meet forecast targets due to bottleneck constraints at railways and ports, it said, which in turn have affected Walter's plant utilisation rates and coal companies' start-up times on projects.

Walter Mining ended the year with revenue of $103 million, falling short of forecasts of $151.5 million.

Managing director Garry Ash said that while the figures seem disappointing on the surface, they indicated a 23% increase of revenue from the previous year.

Walter Mining also ended the fiscal year on a high note with second-half results positive, as many projects started in the first half of the year came into production.

Ash expects a similar trend to emerge in 2008.

To help smooth out the bumpy rise of earning volatility, Walter Mining will increase its service related contracts for electrical machine and conveyor maintenance in fiscal 2008.

"We expect modest growth in Walter Mining in FY2008, but we expect this to be followed by strong growth in FY2009," Ash said.

Ash added that Walter Mining had a "certain amount" of spare plant capacity, but was expecting better utilisation rates in 2008 and did not expect to outlay capital to drive growth. Instead the division will focus its spending on maintenance.

Both divisions will also continue a focus on research and development. In fiscal 2007 Walter Mining used two road headers at the Blakefield South drift project fitted with temporary roof support and automatic roof bolting mechanisms. The technology was a first in Australia and was introduced for productivity and safety reasons.

With about 70% of the company's work for the 2008 financial year already secured, Ash expects a strong upcoming year for the group.

He added Walter plans to double its group revenue and EBITDA every five years.