Australia: Clough Profit Spikes

Engineering and project services company Clough Limited announced statutory NPAT from continuing operations of $43.2 million for the half year ended 31 December 2012, a 139% increase on the prior half year. NPAT including discontinued operations increased by 270% to $43.2 million benefiting from the growth in earnings from continued operations and a break even result in the current period from discontinued operations.

Total revenue from Clough operations (excluding Forge) was $660.3 million, up 42%, and underlying EBIT from Clough operations (excluding Forge) was $38 million, up 196%.  EBIT margin increased to 5.8%, compared to 2.8% for the previous corresponding period.

Clough’s CEO and Managing Director Kevin Gallagher said “This encouraging result has been supported by a group wide focus on improved performance.  Company initiatives focussed on delivering excellence in project execution, cost efficiency and enhanced productivity have started to improve the business, providing a strong foundation for growth in the coming year”.

Operational Performance:

Clough’s safety performance continued to be Australian industry leading.  Lost time injury frequency rates per million work hours decreased by 55% to 0.08 while total recordable injury frequency rates per million work hours decreased by 30% to 2.02.

New contracts and contract extensions awarded during the period, together with the reassessment of the value of existing contracts, increased the order book to $2.5 billion.  As at 31 December 2012 the order book was 77% cost reimbursable and 94% leveraged to the LNG sector.

The company worked on more than 20 major energy and resources contracts across Australia and Papua New Guinea, including key LNG contracts for Chevron’s Gorgon and Wheatstone projects, INPEX’s Ichthys, Santos’ Gladstone and QGC’s Queensland Curtis.

All Clough businesses recorded EBIT growth during the half with Engineering up 56% to $33.8 million, Projects up 82% to $24.5 million, and Commissioning and Asset Support up 350% to $4.4 million, compared to the previous corresponding period.

Forge continued its strong performance with its total revenue for the half year increasing to $503 million with Clough’s share of NPAT at $12.2 million.

Strategy & Outlook:

Clough secured revenue for FY13 increased to $1.37 billion, with $1.0 billion of revenue already secured for FY14.  For both FY13 and FY14 Clough expects to deliver a minimum EBIT margin of 5.5%, with a longer term EBIT margin target of 7%3.

Commenting on the company outlook, Kevin Gallagher said “The outlook for Clough has never been stronger.  We have a record order book and a strong tender pipeline which features a number of good quality, near term opportunities across all of our businesses.  Our strong balance sheet and cash position provides the flexibility to pursue growth options in the coming year.

“The acquisition of leading commissioning contractor e2o in January aligns with our growth strategy for our Commissioning and Asset Support business and will augment Clough’s existing project services with highly specialised and independent commissioning services. 

“Clough will continue to focus on driving enhanced productivity and improved project delivery for our clients, while building capability and capacity in a controlled and orderly manner, to leverage future opportunities and deliver long term, sustainable returns for our shareholders”.

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LNG World News Staff, February 18, 2013; Image: Clough