Emeco: On track
Emeco's result reflected a company getting on with optimising its operations - in a trading environment which has continued to be difficult in FY-16 (as it was in FY-15).
The numbers first - revenue was down 14%, but with the reduced operating cost base, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 25% to $54m, as compared to FY-15. This was in line with the company's guidance. Additionally, free cash flow generation was $43m; a considerable step up on FY-15 ($19m).
As noted above, operating conditions remain challenging. More specifically, overall operating utilisation was 44% (as compared to 46% in FY-15). A decrease in Canada was mostly offset by higher utilisation in Australia. Canadian operations have been restructured following a significant fall in utilisation from Q1 to Q3 of FY-16 (including the major fires). NSW operations have been performing well, and Queensland continues its strong recovery. WA has had projects finish, resulting in declining utilisation there. Temporary disruptions occurred in Chile as the fleet was relocated between projects.
The continued difficult operating conditions resulted in Emeco taking a further asset impairment charge in FY-16 (impacting statutory earnings).