BRADKEN Limited, chaired by New South Wales Infrastructure head Nick Greiner, has ridden the resources boom to post a $100 million profit from its cast steel products in the mining, energy and rail freight industries.
The result exceeded guidance given in April when the company announced an earnings downgrade due to one-off costs. The shares rose 11.2 per cent, closing at $5.74.
The company said its profit after tax was up 15 per cent after minorities, which consisted of write-downs in goodwill of some UK assets. Statutory net profit was up 49 per cent.
Managing director Brian Hodges said Bradken’s order book was at record levels, its foundries ”are pushed to full capacity” and it had added capacity at foundries in Australia, Canada, Malaysia and the US.
”Bradken margins are strong and will remain very defensible,” he said. Accounts showed its overall gross profit margin was 29.8 per cent, with mining consumables, engineered products and industrial posting margins in the low 30s. Rail’s margin was 13.6 per cent.
But the company would minimise its capital expenditure in 2012-13 ”until the outlook becomes clearer”, Mr Hodges said.
Revenue from the mining products division was up 22 per cent at $648 million, boosted by acquisitions. Rail freight sales were up 56 per cent to $330.2 million. The US-based engineered products division was up 20 per cent, to $347 million. Earnings before interest, tax, depreciation and amortisation were $220.4 million.
Mr Hodges said he expected the past year’s softness in the energy sector to ease in the fourth quarter.
”There is quite a lot of expansion in land-based oil, and expansion in gas fracking and low-cost energy, which seems to be having such a positive impact on the US economy,” he said, and Bradken would get a spinoff.
Moelis Research noted the global uncertainty with coal, which represents 9 per cent of Bradken’s sales, but thought a GFC-type slowdown was unlikely. Bradken will pay its fully franked final dividend of 21.5¢ on September 4.
This story Administrator ready to work first appeared on Nanjing Night Net.