Coffey expects earnings to lift

ENGINEERING consultants Coffey International is expecting a profit of up to $A57 million for the full year to June, despite a significant drop in revenue in the third quarter.
Coffey expects earnings to lift Coffey expects earnings to lift Coffey expects earnings to lift Coffey expects earnings to lift Coffey expects earnings to lift

Coffey International managing director Roger Olds

Claire Svircas

The company said it expected operating earnings before interest, tax, depreciation and amortisation in the range of $54-57 million for the year to June 30, 2009, including one-off costs of around $2 million associated with redundancy payments.

This compares to a full-year result of $49.7 million in the previous financial year.

Coffey said following a strong performance in the first six months of the financial year, market conditions in the third quarter to March 2009 saw a significant drop in revenue across its consulting and project management divisions.

This was only partly offset by a continuing strong performance of the international development division.

Coffey said some of the revenue drop resulted from project delays and cancellations, but others were a result of temporary events such as cyclones in northern Australia.

The company responded with staff redundancies and a cost-reduction program, which to date has saved an estimated $8 million of annual cost.

The aim is to save $20 million through continued efficiency strategies.

The company saw improved performance in April and May, and expected June to continue to improve, albeit still below the levels achieved in the prior corresponding quarter.

Coffey said the recent federal government stimulus packages were having a positive effect.

“The company has won several major contracts in the education and housing sectors, and we are currently involved in many other major project bids being delivered under the infrastructure spending packages, much of which is still planned for the months to come,” the company said.

“We have also won numerous other projects with governments around the world, and in the LNG industry, where several major projects are under development.”

Managing director Roger Olds said there was upcoming work in the road and rail sectors, and the company had already won geotechnical work on the Crossrail project in London.

However, the outlook for the commercial property and mining sectors remains slow and challenging, according to the company.

Coffey said directors had recently approved the company’s next three-year plan, which will focus on building the company within current geographies.

"We will focus on organic growth and plan to fund this from existing capital and debt facilities,” Olds said.