Ausenco Limited announces the recent acquisition of the Canadian oil sands engineering business Projex Technologies.
Part of Ausenco’s strategy to increase the diversity of its business with greater exposure to the global oil & gas, and power sectors, this acquisition has also resulted in the company’s expanded service offering in Calgary, which has been well received by staff and clients of both companies. The acquisition will result in at least 8% of Ausenco’s 2014 group revenues being generated in the growing North American oil and gas market.
In the long term, Ausenco’s growth strategy will provide an enhanced and more balanced revenue mix from the key customer sectors of environmental, minerals and metals, oil and gas, power and process infrastructure.
Highlights of Ausenco’s market update
APAC/Africa’s business performance has been materially impacted by increased market competition in the short term, leading to some contracts being renegotiated with clients, and resulting in lower margins and significantly reduced scopes and revenues on existing contracts. Ausenco's 2013 second quarter margins were also impacted by a small number of underperforming contracts, resulting in approximately $6 million of additional costs provided for during the period.
In the Americas, Ausenco's activities, which broadly cover the resources, infrastructure and energy sectors, have somewhat insulated the business lines operating in this region from the current short term uncertainty in mineral commodity markets.
In order to address current market conditions, Ausenco has initiated a number of overhead cost saving programs and is ‘right-sizing’ all areas of its business to levels appropriate for the current operating environment; these initiatives have resulted in extraordinary redundancy costs of $5 million incurred largely in the second quarter of 2013. These changes and others initiated by management are expected to save $13 million in overhead costs in the second half of 2013 and between $20 million and $25 million annually from 2014.
Ausenco's financial performance in the 2013 second quarter has been affected by a number of contract specific issues, a softer market, and extraordinary costs associated with right-sizing the business to maintain sustainable longer term margins.
Based on the lower first half performance and current lower business activity levels expected for the remainder of this year, the 2013 full year results will be below the current market consensus levels of revenues between $564 million and $661 million and reported net profit after tax between $29 million to $41 million.
Looking ahead to 2014, Ausenco continues to work on a large number of Evaluate, Innovate and Optimise assignments where activity levels have maintained annual revenues above $270 million. Based on the company's current project pipeline, growth is expected to be seen globally across new Create phase capital development programs where up to three times more new assignments than are currently targeted for the rest of 2013 are earmarked to commence around mid-2014.