Opus annual profit drops 36%, dividend fattens

Opus International Consultants [NZX: OIC], the listed engineering firm, posted a 36% drop in annual profit as it wrote down the value of its Canadian business, while fattening its dividend to shareholders as underlying earnings beat expectations.

Net profit fell to $16.7 million, or 11cps, in calendar 2015, from $26.2 million, or 17c , a year earlier, the Wellington-based company said in a statement. That included a $12.6 million impairment charge on the value of Opus' Canadian business and an $8.1 million gain after the Stewart Weir business missed targets that would trigger payments to the previous owner. Operating earnings before interest and tax fell 5.2%  to $30.9 million while revenue was down 6.5% to $506.2 million.

"It is a challenging environment, not one for the faint-hearted but our market diversification and continuous improvement programmes are mitigating the downturn in some markets and helping the business thrive in others," chairman Kerry McDonald said. "Challenges remain but we are well-placed on a new corporate strategy designed to reposition the business for the future, including targeting planned increases in infrastructure spending in each of our main markets."

The company had previously said its Australian and Canadian segments were struggling in their respective markets, and had embarked on a new strategy for the business through to 2020.

The board declared a final dividend of 4.9cps, taking the annual payout to 11c, including a 2c  special dividend declared at the interim result.

Opus said the increased dividend was due to a stronger cash position. The company changed its dividend policy to between 50-70% of adjusted net profit. The ordinary dividends of 9c  per share amount to about 63%  of adjusted net profit, and including the special dividend, rises to 77%.

The dividend payment and underlying earnings measures beat Forsyth Barr analyst James Bascand's forecast for ebit of $27 million and dividends per share of 8.2c, and Opus shares rose 2.6% to $1.20.

Opus' New Zealand division increased operating ebit 29% to $36.8 million, even as revenue slipped 3.7%  to $276.7 million while the UK division more than doubled earnings to $2.7 million on a 30%  gain in sales to $64.3 million.

The Australian unit widened an ebit loss to $2.6 million on a 22%  drop in revenue to $50.5 million, while the Canadian business reported an 80% slump in earnings to $1.5 million on an 18% decline in sales to $112.4 million.

The engineering consultancy cut staff numbers in all segments bar the growing UK unit, which added employees, and has restructured its Canadian and Australian businesses.

(BusinessDesk)